Cybershot DSC-W55 File Size of Photo

When I print out the pictures I take on my Cybershot DSC-W55 the pictures are fuzzy, my graphics artist tell me I have to adust the file size. The camera is 7 megabytes. He says I need to set it so there are less pictures but bigger pictures on my memory card. I can't seem to find the settings to do that. He says I need more pixels per photo.

Now I see how the change the different file sizes and it appears I am at the highest, 7 Megabyte, which they say allows me to print a 11x7 print, but the problem occurs when I resize the image and insert it into a newsletter and then when I print the newsletter I get the problems. I usually use IrfanView to resize my pictures, is this "free" program not good enough to do what i need to get done?

Have you tried using, printing and resizing through photoshop? Really thats the only program I can trust to get printing and image resizing done right.

Re: Photoshop. Actually I have Photoshop Elements but it is not loaded, do you think that'll be good enough?