quality setting

Here's the section of the Kodak Manual explaining various picture quality settings -- this well written manual addresses your question directly and well, I think.

But I would add one more thought: these days memory cards are so inexpensive, why not shoot at the full 4MP resolution of the camera and keep your options open? You can't ever get that resolution back once you have decided to set the camera down. But it's easy to reduce the size to suit your objective. Here's another way:

A free program from Google, called Picasa does an exceptional job of helping manage and process your pictures. You can send them to be printed, you can send them in an email, you can print them on a photo printer, make a CD with a built-in player, and all sorts of other really cool (and easy to use) features. In particular, Picasa knows that when you want to email a picture, it should resize it to be smaller than if you want to make a large size print. I have used a number of photo organizers, but Picasa is my favorite for several reasons, and it just keeps getting better.