Pretty much anything you can buy on todays market will AT LEAST take a clear 5x7.
More megapixels is better, but most people don't *need* what they can currently purchase.
If you're looking for the typical 4x6 printout to send to family, you don't need to get the most M/P you can....even a 2 or 3 megapixel camera will be fine.
If you care about poster size printouts, posting large pictures online, or cropping and enlarging photos for whatever else...then go for everything you can get.
I've taken some amazing pictures with an old 4 megapixel camera that printed out some pretty sharp 8x10's.
In other words, I think of megapixels as translating into how large of a paper print I can make while still keeping good clarity. More megapixels means I can print a larger picture, with great clarity.
A standard for photo's like you might see in books, the paper, whatever, is 300pixels per inch...that'll look great to the naked eye. To make a 300ppi print in 5x7, all you need is a 3megapixel camera. To get a 300ppi 8x10, though, you'll need a little more than 7megapixels.
That being said, most people are happy with a 200pixel per inch photo. This will have enough clarity for a good picture--below that and detail starts to look fuzzy or "pixelated." I consider a 200ppi print the minimum for a "good" printed picture.
A 3megapixel camera, like mentioned above, can print a 8x10 with 200ppi clarity.
The 7megapixal camera will do a 10x15 with ease. If you don't plan to print anything larger than a 10x15, you don't need a 10+ megapixel camera.
I'd guess a good 90% of todays new digitals also have some form of image stabilization...the higher the zoom, the less still you are, or the less light available, the more likely you are to get blurry pictures. Image stabilization can be a good thing, and will keep your images CLEAR in less than ideal situations.!
Zoom!
Forget "digital zoom" that means nothing. Only worry about OPTICAL zoom.
Most "pocket" cameras have 3 times zoom (3x) or a bit more. Some of the larger are up to 10x to 15x+ optical zoom. More the merrier, IMHO, keeping in mind the blur becomes a factor at high zoom (you'll need a tripod or a camer with good image stabilization. A poor quality lense will look "fuzzy" at high zoom).
I say get the most OPTICAL zoom you can, or at least the most you can get with the size of camera you desire.
The larger the lense (typically) the clearer and brighter your images will be. Tiny pocket cameras tend to be a bit darker, and don't get the colors just right. The larger cameras with better glass do a much better job--but at added expense of size, and weight.
Again, go for the biggest/highest quality you can, or are willing to lug around.
I hope this helps a little. That's my "basic" guide for a decent digital camera....though I'll admit, I'm far from camera savvy.
I posted this pic before, but some people really liked it so maybe it'll help. This should show you what a CHEAP digital camera is capable of. This was an older kodak (3yrs old I think) with 4 megapixels and 5x optical zoom--paid $199 at the time. A similar camera today is likely ~$140-160. This picture was also cropped to about 35% the size it originally was--so you can imagine how large you could get a good, clear print with only 4megapixels.
