** The following post is my Opinion on what resolution I use to take pictures**
AS WITH ALL THING EVERYONES MILES MAY VARY
I've been taking pictures at Medium Resolution on my Digital Camera for 3 years. I have never found a reason to take pictures at High Res unless I knew this is a picture I am going to make a 8x10 out of.
I have gotten awesome shots that print good on my inkjet with my 1.3 Megapixel camera. At medium res it takes 1280x960, which is good for 4x6 shots. If you are not planning on printing 8x10's and most people don't, then medium resolution on your camera should be fine.
I have two HP Inkjet printers at home, an Deskjet 800 series and a Photojet 1200 series. Both these printer produce decent printed photos from my medium res shots when printed on High Quality Inkjet photo paper. (The paper is shiny and doesn't absorb the ink, if you are going to print your own shots I recommend getting some.)
To get AWESOME printed shots, I have found the best thing to do is upload the pictures to Fuji, OFoto, Kodak, etc. They use professional quality printers to print your shots and when you get them back you will not be able to tell the difference between them and a 35mm camera shot. Costs about .50 a shot.
For my average vacation shots I print them myself and put them in a photo album with a shiny plastic cover sheets. When under the plastic sheet you have to look really close to notice that these are digital camera shots.
For pictures I am going to frame, I send them to Ofoto, or Kodak and have them print them.
Over the years I have found that its the printers that really limit what a picture prints like, not the resolution of the camera. As long as the picture is at least 1280x960 then you shouldn't have a problem.
Newer cameras with more megapixels, like my new one take higher res medium shots, so by buying a camera with a higher megapixel you by default get better shots at Medium Resolution, and at the same time they are a little larger file. All the more reason not to use High res and save yourself some diskspace on your cards .
Of course everyone has to decide for themselves how their photos look.
I hope you find my rambling useful.
Cindy in NY