I started out with a photo and cropped it to approximately 23"x23". It's ppi is 72. That's pretty big. Lots of room to work with.
However, if I enlarge this photo by 200%, what I get is a pixelated, grainy and fuzzy picture.
But, if I take the same picture (image 1) and reduce it to 6x6, it looks much clearer and cleaner at full size.
The one thing you never, ever want to do, if you can avoid it, is to enlarge a picture. The pixels have to make guess about color to fill in when the picture is enlarged. If you have to enlarge do so in 10% increments. This seems to help with the pixelating, but even this can only go so far.
All of the images above have been kept at the resoltuion of 72 ppi. When you are working with scrapbooking though, you are going to want your photo resolution to 300 ppi. And this is where pictures at the highest megapixel rate will be a benefit.
When I go to image resize (Image>Resize or shift s), I set the pixel dimensions (in the second block) to percent.
Now as I change my ppi and dimensions (in the first block), I can see at what percent the picture is going to be of the original. Always try to keep the percentage at or below 100.
It's difficult to really show the differences when I am reducing the sizes to place on the blog so I suggest you go ahead and try it out yourself. See what a difference it makes. Just make sure that you view them at 100% to get the full effect.