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My suggestion is you want to take the biggest size possible. You can always shrink it later, but you can't add resolution once you've taken a smaller image. Reasons you want a big image: 1. To get a good quality print out of it. Even a marginal print is 150 dots per inch compared to 80 or so for video display. And 300 is better. (This is why graphics printed from a web page usually look like crap. Most experienced web page designers will make the image the smallest size possible, which means they sacrifice resolution which is redundant on a computer monitor but critical for making a good image on paper.) 2. You want to be able to crop the image and still have something good to work with. If you take a 1280x1024 image and then you make a big crop, you don't have a lot left.
If you're really, really, really, sure in advance that you will never want to print out something, then go ahead and shoot at a lower resolution.
Also, YMMV, but in my experience you get better results with a memory card reader to let you take your memory card out of the camera & plug in to the computer rather than plugging in the camera.
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