POP Collector deletes the database entries when it deletes the messages from the server. In practise the database size does seem to increase over time, but not hugely. I have just checked a system on which it has been running for five years or so, and the database size is 4Mb.
It seems that sometimes entries do get left in the database. POP Collector doesn't currently check if it has entries for messages that don't exist on the server anymore - so if something else deletes the message, the details will remain in the database. While I could add functionality to check, I probably won't as it would involve a fair bit of work for little benefit. If DB size does ever become an issue, you could delete all the old entries manually.
I didn't realise the zip file contained a subdirectory - I will change that! But yes, the database needs to go in the same folder as POP Collector. I probably will add code to create the database if it can't be found - then if I recreate the package again it won't matter if I overlook it!