One of the key price differentials in digital cameras is the resolution offered. You should be aware that there is a great deal of "specsmanship" being used by the various manufacturers and sellers of digital cameras to tout particular brands and models. Not all resolutions are created equally.

Some cameras offer "interpolated" resolutions. This means that the camera makes up information about your image by inserting pixels of averaged values between pixels actually seen by the imager. The results of this process can be quite impressive, but it's not the same thing as a true optical resolution. Beware of high-resolution cameras with low prices, compared to others in the same class, because they may be quoting interpolated resolutions.
And, there's the matter of compression and the resulting losses in image quality. In some of our other articles we discuss compression and why it is used. Just be aware that an uncompressed 1024 x 768 image will probably look better (or have better visual resolution) than a similar 1200 x 960 image that has been highly compressed. Some cameras have the option of saving files as uncompressed images, while others automatically compress files with no warning. This is sometimes done to fit more images into a small space such as built-in memory or a disk.
Most digital cameras will offer several "quality" modes. These modes are combinations of resolution and compression. You'll need the "best" setting for your fine photography work, and the lower settings for documenting, quick snapshots, and electronic display images. You'll use the lower-quality settings for electronic work because computer monitors are generally of lower resolution than the pictures you are taking, so there's no point in providing the computer more pixels than it can handle. Remember, more resolution and less compression means bigger files, which consume more storage space and take longer to transmit over the Internet.
Whatever camera you buy, make sure it offers a "standard" resolution (e.g., 640 x 480 pixels, 800 x 600, 1024 x 768, 1600 x 1200, etc.). This makes it easier to edit your pictures on a computer, and to get standard-sized prints from a photo-finishing service.

If you're going to be printing images, you can obtain far better resolution than your computer monitor can provide. So you'll need to bump up the quality. If you're going for photographic-quality prints, you need the best quality you can get. One of the great things about digital photography is that you can change your shooting modes at any time, so some of the shots on your digital film card can be high resolution, and some of them lower.
A General Guide to Using Resolution. Web pictures, e-mail, etc.: 640 x 480 is fine. If your camera offers more resolution, select a "lower-quality" setting when taking these pictures. Some cameras now call this the "VGA setting."
Quick snaps, personalized greeting cards, inkjet-printed copies: You'll need a bit more resolution, maybe 800 x 600 at the lowest, or 1024 x 768. As you blow up pictures, the pixels expand, so if you want any kind of detail to be printed, you need to start with higher resolution. On cameras with even higher resolution, you can always select a "medium-quality" setting.
Enlargements, commercial printing, photographic prints, portraits: Use the best setting available, uncompressed if possible. A reasonable level for the consumer is around 1600 x 1200. Those of you who are in the biz should be looking at even higher levels of resolution. As your pictures get larger in their output formats, more resolution is needed to prevent excessive graininess in the form of pixellization. So take your pictures on "best quality" mode; they'll produce huge files, but they'll give you the best quality available in the camera. You can always downsize from there. There's nothing worse than capturing a great image in a low-res mode, and then wanting to enlarge it.