Resolution is resolution, period. DPI - dots per inch or PPI - pixels per inch is exactly that. BUT...
A 1.3 megapixel camera generates an image about 1000 pixels high and 1300 pixels wide. How many of pixels there are per inch on the CCD or whatever is unimportant, what you get is a 1000x1300 pixel image, OK?
If you print this image out at a half reasonable resolution on a printer, say 300dots per inch, the image will be roughly 3"x4". If you print at a higher rez, say 600, the image will only be about 1.5"x2"
Remember that this 600x1200 quote is marketing crap with printers, if that was actually the case, your images would end up being twice as long as the are wide, because one dimension would be using up twice as many of your image pixels as the other.
Inkjet manufacturers are lying through their teeth. A piece of paper may receive thousands of sputs of ink from the four(or even six) different colour heads, every inch. The rows of dots from the different colours are slightly offset from one another so the manufacturers claim a total higher number of dots per inch. They should really quote the number of DPI for a single colour. Ever wondered why text is so crap on inkjets that supposedly have a 1200 DPI resolution. The black on it's own is only about 300DPI, 400 tops. Geddit.
The real resolution of your printer(at best) is the lower of the two figures. The printer manufacturers try to hide their lie further, by never quoting actual pixel dimensions, they just ask how big do you want the image, 3"? 6"? My, aren't they helpful!!! True resolution never enters into it!
As far as buying a digital camera or scanner is concerned, what's the type of usage? If it's web use remember that a computer screen has a resolution roughly equivalent to 72DPI, so you only need(coincidentally) a less than one megapixel image, 1024x768 (786432pixels) to totally fill the screen.
For printing stuff out at a reasonable size heres the SP:
If you want a 10"x8" print at 600(proper)DPI you would need a 28(that's twenty-eight) megapixel digital camera. Solution: Use a film camera and a film scanner! I do!
A more reasonable example would be a 5"x7" at 300DPI which requires a 3.1megapixel camera.
After that, it's only a question of quality versus size. 2 Megapixel is reasonably good now and fairly inexpensive, but remember manufacturers are always coming up with new ways to confuse the resolution issue, FUJI being the cheekiest recently. Octagonal pixels, my ass!
You could look at an excellent imaging site for more info:
http://www.cix.co.uk/~tsphoto/ 
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