This question has been discussed and misunderstood for years. This topic goes along with what color settings values in Photoshop, QuarkXPress, and InDesign are printable. This discussion often confuses people, especially when press houses request 300 DPI files.
Ultimately, the size of print you need and the amount of money you intend to spend will inform how many megapixels your camera should have and, in turn, the resolution you should target.
Too many people either use too high of resolution or too low. The key is to have enough resolution that you don’t lose detail in the delicate light tones. A resolution of 180 to 240 at the printing size will produce a full detailed print. This means you do not create an 8×10″ file at 300 DPI and decide to print it at 40×60″. At 40×60″, the image resolution would be reduced to about 55 DPI, which is unacceptable.
Ideally, you need to create a file at 40×60″ and have a resolution of 180 to 240 DPI, which sizes out to 222MB and 395MB respectively.
Now let’s say your image is not large enough. There are two pieces of interpolation software you can use to try and upscale your image: PhotoZoom and Genuine Fractals. Keep in mind that you should not expect either of these programs to maintain quality image interpolation over 200%. They can, however, make a significant difference. It depends on the image structure and how much loss you are willing to accept.
If you are producing portrait prints, magazine images, and any other images up to 11×14″, most digital cameras today are more than adequate. However, if you plan to make images greater than this in size, you should consider at least a 36 megapixel camera for no interpolation and a 22 megapixel camera to need only a small amount of interpolation.