I too wondered about this some time back when I first got my FZ10. I took two pictures using the two resolutions and zoomed in on certain parts of the pictures. When placed side by side, both started to pixelate at about the same enlargement setting and at some points, the lower resolution setting seemed to render more details. For example, the aircon units of a factory showed details of the fan blade in the lower resolution picture while the higher one seemed smudged.
Still not sure about it now, but since getting the 512mb card, I have left it at the highest setting.
Anyone with more information care to shed some light on this?
You're right. Actually not much differences unless you print super-large sizes. For the normal 4R prints, the Normal quality setting is more than enough, due to the large pixel count of the image itself. Looking back at my 4R prints of my old 2MP camera, actually also cant see quality differences compared to a 5MP print... same only
but of course, if you plan to enlarge, or crop, or do image editing (heavy ones) then dont skimp on the quality, use the highest possible - RAW if you are capable, usually stores about extra 1-stop of DR!