How determine best initial setup (resolution, etc.) for printing photo

Question

Have worked with older versions of photoshop, now working towards bettering overall skills, and using Photoshop CS4.   Would like to ask about how to setup an image initially, when first click File > New
Typically will be "photoshopping" jpg images, from 12 mega-pixel camera, and want to print color photos at max resolution, at local photo printer.  Am using Windows 7 PC, 64bit (maybe not relevant?).  So question is… how do you know what to enter for settings.
Example.  Working now on an image to print as a 16” x 20” photo, at whatever would be highest/best resolution.  But don't want to create a massive file with overkill resolution that far exceeds what the original picture has in it.  So, what would be best settings to fill in the blanks below?  Thanks for any quick/direct insights, plus any basic articles that cover this...
File > New
Preset:                   Custom
Width:                    ___ in   (16?)
Height:                   ___ in   (20?)
Resolution              ___ pixels/inch
Color Mode             ___ 
Background Color   ___

Answer 1

Before we get into the specifics, I want to ask "why" you're doing File - New to work on photos (opposed to just File - Open).
Generally speaking, for doing photo or other editing you want to work at or higher than the pixel count you'll want to print at.  Even with inkjet printers, there are actually visible differences right up to about 600 ppi, though most folks feel 300 ppi is sufficient for a good print.  Somewhere on this forum I wrote up a post where I tested a highly detailed image printed at various ppi levels then examined the results critically with a loupe and took macro photos.
My recommendations / opinions:
I suggest rather than trying to manage ppi early in the process that instead you think in pixels.  I've even changed my rulers to measure in Pixels by default, so my File - New menu shows me the pixel counts.  Think in pixels while editing, but keep in mind your ultimate use for the image.
If you're just doing photo editing, and not trying, for example, to put together a collage or something, but looking to print one photo, here's a suggestion:
1.  Open the image at the camera's native resolution or higher if your computer is powerful enough.  What I mean by this is if you open a raw file through Camera Raw, consider choosing one of the upsampled resolutions.  I open my Canon 40D files at 6144 x 4096 pixels, for example.
2.  Do your photo editing at the pixel size at which you opened the image.  In other words, don't do things that resample it.
3.  Only consider resampling to match the needs for output.  For example, if you're going to print the file, you may not need to resample at all - just let the printer driver do it and see how that works.  But if you're going to publish on the web, you will probably want to downsample the image.  But do this after you've saved your master file (if you're going to save a copy).  Consider the downsampling preparation for output.
In your example, if I were prepping a photo for 16" x 20" output, I'd do this:
1.  Open my raw file at 6144 x 4096 (the largest Camera Raw will emit)  x 16 bits/channel.  Some quick mental math says that the print ppi will work out to the vicinity of 300ish, which is good for an image that size.
2. I'd set the Image size of the smaller side in the Image Size dialog to 16" height WITHOUT resampling.  The other side will show as 24", indicating the image will need to be cropped, I'd then crop to 20" on the longer side, again making sure not to resample.
3.  I'd do my various editing steps without resampling, and sharpen near the end.  The order of steps 2 and 3 isn't really important.
4.  I'd then do File - Print.
The thing to do is if you're unsure of things, just try them and do test prints, and use your own judgment about what looks better.  Don't assume you HAVE to do things a certain way because of what others say.  You might just find a workflow that works for you and gives you dynamite results with your ways of working and your equipment and software.
Good luck.
-Noel