Yes, for opaque transfers (for dark garments) you do need to cut your transfers to follow the contour of your design, otherwise you end up with a box-effect that doesn't look very professional.
A lot of people cut their transfers by hand. That works for simple contours, but if you get into complex designs and don't want to use just a rectangle or oval, you might want to look into getting a vinyl cutter that will do automatic contour-cutting for your transfers.
A good beginner plotter for inkjet or laser transfers is the Graphtec CE5000-40 CraftROBO Pro. It cuts 15" wide and will read registration marks that you add to your image your design program automatically.
This plotter (vinyl cutter) costs about $950, but it's a VERY robust and capable machine.
Another, cheaper, option is the Graphtec CraftROBO (not Pro). It will cut about 8 inches wide, but it's a more limited machine. It costs around $350.
Right now I suggest that if anyone wants to purchase one of these machines they go to
Specialty Graphics Supply
They give a 5% discount to forums members when you add their discount code (found by looking under "View Offers" on the left side of your screen here), and they offer a 10% discount on all supplies for 30 days after you purchase your machine.
With a vinyl cutter it will open up many more options for you, too, like using t-shirt vinyl for shirts, vinyl decals, adn signs (if you want to make signs I suggest you go with the larger Graphtec CE5000-60 24" plotter, also available at Specialty).
Good luck!
black/dark garments learning and cutting for them 
