How Many Megapixels Do You Need?

The answer to this question depends mostly on what you want to do with your pictures.
 
If you want to just view your pictures on your computer screen, you do not need many megapixels at all. The typical laptop sold today comes with a screen with around 1 megapixels. Most high end screens do not have more than 2 megapixels.
 

99% of cameras on sale today have more than 5 megapixels. Basically then, the number of megapixels you need comes down to how large you want to print your pictures.
 
For example, I have a 6 megapixel Nikon D40. How large can I print?
 
That is only restricted by the quality I need at the output. This is determined by the ppi, or pixel per inch.

This determines how many pixels of your image cover one inch on the print. For the highest quality prints, this should not be smaller than 360 and for normal quality prints, not smaller than 180. Using these numbers with the 3000 x 2000 image size of the D40, I get the following results.
For an optimum quality print, I should not print larger than about 20×15 cm.
For a normal quality print, I should not print larger than 40×30cm.
For me, this is completely sufficient. The largest size I print is 30×20cm, and that falls in right between optimum and normal quality for a 6mp camera.
 
Since even the cheapest cameras on the market now have more than 5 or 6 megapixels, this has become a total non-issue for me. If I go to buy a camera these days, I do not even consider the pixel count. Unless you are printing huge posters, neither should you.