Image quality in low resolution
SHQ1 and HQ are two different levels of compression to make the file smaller. This will have a great impact on the image quality.
Generally on Olympus cameras, this is what those letters mean:
TIFF (highest (best) quality) generally not used. Files are HUGE and takes a long time for the camera to save the image to the card.
SHQ (super high quality) you probably wouldn't be able to tell the difference between this and the TIFF
HQ (high quality) which is lower quality than SHQ
SQ (standard quality) which is lower quality than HQ
SQ1 (standard quality 1) which is lower quality that SQ
SQ2 (standard quality 2) which is lower quality that SQ1
A 2048x1536 only seems large because most people have their monitors set to 800x600 or maybe 1024x768 (that's what I have mine set at).
This will seem to make the image REALLY LARGE! It only seems that way because you have to scroll around to see the image.
If you want to print images, you'll want all the resolution you can get.
If you want to display them on your screen (slide show,WEB page) then you don't need large images. You would just need to resize them down.
However, since you may want to both, getting a camera with a higher resolution gives you the choice to do either. Usually, the higher resolution cameras have better lenses and generally take better pictures.
On my camera (the Oly 2100), I always shoot at the highest resolution and the least amount of compression (SHQ on my camera). This allows me to do almost anything with the image. Nowadays, camera media (smart cards) are fairly cheap, HD's are DIRT cheap and CD-Rs are very cheap.
If the images are "keepers", then I personally would want to start with the best image possible and store the images on CD.