The inflatable pillow I use expands to about a foot square, so it isn't large, and when I let the air out and fold it up, it folds completely flat and down to about 3" x 4" or so. Because it is flat, it takes up no room at all, it just slides down at the back of my pannier. Because it is small, it is also light. That pillow was also quite inexpensive. I think I picked it up at Canadian Tire for about $5.

When it is filled, it is quite firm, which I like in a pillow, but you can easily soften it up using clothing or a sarong on top of it.