"Which is Better: a 10MP camera dialed down to 3MP, or a 3MP camera?
Easy: when set to the same resolution, a higher-resolution camera set to a lower resolution always looks better than a camera with that native resolution.
This is because digital cameras cheat and use Bayer Interpolation. They don't really have that many color pixels on their CCDs. CCDs are actually black-and-white and use colored stripes to see color. Bayer Interpolation spreads the data around to fill in each pixel as if it could could see color. Because of this the images of all digital cameras at their native resolutions are more blurred than they could be.
If you halve the size of the image, the pixel-to-pixel sharpness will increase because there is now enough data for each and every pixel. See my Bayer Interpolation page for examples.
Therefore it's always better to use a higher resolution camera set down to a lower resolution than a camera with only that much resolution."