There is a generally held view (and one encouraged by the camera manufacturers) that more pixels = better quality. In absolute terms this is not the case - in fact, more pixels can mean lower quality.
Given that a given sensor type is a defined space, adding more pixel sites to the sensor must mean that they are smaller and/or more densely packed. As a general rule decreasing the pixel site size or increasing the density will result in increased noise and reduced dynamic range.
Of course in practice manufacturers have developed improvements in sensor design and image processing which address these problems to some degree - but overall, particularly at consumer camera level, I would say that the growth in pixels has in absolute terms resulted in, at best, comparable quality with older cameras, and in some cases lesser quality. By which I mean that if you compare an image from an old 3.2mp camera with a 3.2mp section from a 12mp camera, you may find that the older image looks better.
But there are other factors to consider - if, in processing, you reduced the entire 12mp image to 3.2mp, then yes, you will probably see a reduction in noise and improvement in sharpness. Also other aspects of cameras (lens, AF
, speed, high ISO performance etc.) have improved over time.
Bottom line - an old 3.2mp camera should be capable of producing quality images, but there will be limitations on how large these can be printed compared to higher mp cameras.
I have pics from the 3mp Canon D30 which, though small, are still of superb quality when compared to current Canon cameras.
Colin K. Work, Pixstel