SIPP creates shadows with a technique called depth maps. A detailed description of this technique can be found in the article Rendering Antialiased Shadows with Depth Maps by Reeves, Salesin and Cook in the Proceedings of SIGGRAPH 1987.
In principle, a depth map is generated for each light that should cast shadows. The depth map is simply an image of the scene, as seen from the light, but instead of a color we store the depth (Z-buffer value) in each "pixel". The finished map will contain the distance to the object closest to the light in each point.
When the scene is rendered we transform each point we are shading into depth map coordinates and if it is further away from the light than the value stored in the corresponding point in the depth map, the point is in shadow. The actual implementation is of course a bit more complicated with some sampling and filtering but we won't go into that.
The reason we describe this algorithm at all is that it is easier to understand how to get good looking shadows and why shadows sometimes look weird if one have an understanding of the underlying process.
First of all: The shadows are generated by sampling in the depth maps. Sampling usually means we are in danger of aliasing and this is very true in our case. SIPP automatically fits the depth map for a spotlight so that it covers all area lit by the spotlight's light cone. If this area is large and the depth map resolution is low, the shadows will get very jagged.
Also, if we have a large surface that is close to perpendicular to the depth map plane, the depth map "pixels" will be projected as long stripes on that surface, so even if the depth map resolution is high, a shadow cast on such a surface will suffer from aliasing (be jagged).
So, if the edges of a shadow look weird, try increasing the size of the depth map (the depth map size is set with SippShadows). If they still look weird, or you run out of memory, try changing the position of the lightsource that generate the shadow. After some tweaking it is usually possible to get fairly decent shadows.
There are two ways to generate depth maps in SIPP, either automatically for each new rendering, or explicitly on a command which will then keep the depth maps around until they are explicitly deleted.