Comment 27 for bug 292504

Well you can right-click -> Properties -> Click the icon and change it, which is probably controlled by some .dotfile in the home directory, but I'm not sure if modifying that file is the right way to go about changing icons programmatically.

The "ugly border" is because you're not actually changing the icon. You're creating a thumbnail for the file (like a thumbnail for a PDF or graphic, which I think is the wrong way to do it.