Well, me for one, though in my opinion most people don't. The first consumer digital SLRs were 6 Megapixel cameras. I remember, I had a original Digital Rebel back in 2004 when they came out and I thought 6MP was a world of data. Granted my previous digital camera was a little 2MP digital Elph so it real was a world of data. Then I went to a 20D at 8MP and a 5D at 12MP and finally to a 5D2 at 21MP. Now the average pocketable compact camera is 12 to 14 megapixels, which I think is just crazy.
DigiCams First off, most of the people using these cameras are coming home from a vacation and dumping their 140 pictures of them and their family at the beach onto their computer. Probably into iPhoto or similar and then onto Flickr or Facebook. Both of which will involve throwing out 90% of the picture's information to get it down to the 1000px that'll fit on your average screen. Very few people print anymore. In fact, I don't think I know anyone other than pro or serious amateur photographers who does. I'm sure there out there, but I don't know any, and I think the days of having shoe boxes full of 4x6" prints has certainly come to an end.
It's not to say that I don't think people should print. I certainly think they should. Most of the online places will do 4x6" prints for 20 cents or less. I think people should come back from their vacation, cull the 140 pictures down to 30 good ones and have them printed and put in a box or an album. No one needs to see 7 shots of that same sunset. Pick the best one or two and move on. In fact I think that's a problem for photographers in general in the digital age. Digital lets you take a lot of pictures, but that doesn't mean you should and it doesn't mean you have to keep them all. It's all about editing.
And even if people are actually printing; How big are they printing at? I printed a couple shots from my 6MP Rebel at 20x30" and they're passable from a foot or two away. But how many people print posters? I'd say that 99% of pictures are printed 8x10" or smaller, and a 12MP compact is overkill for that size print. Now, lest you think that I'm just trying to take good tools out of the hands of amateurs, let me say that I want to give them better tools. Or rather, tools which are better for what they use them for. Canon lately has thankfully let off the race to pack in more pixels. Their higher-end compacts were brought down to 10MP in this last iteration and I think that's a good thing. You see, the sensor in these little cameras is about the size of your pinky fingernail and it hasn't gotten bigger in a very long time. That means that the more pixels they pack in, the smaller each one gets. The smaller the pixels, the less light they capture, which leads to more amplification being used which amplifies the noise along with the image. Manufacturers have gotten really good at employing a number of hardware and software tricks to keep things in check, but I suggest another line.
Keep the resolution at 10MP or even bring it down to 8MP. Then allow the engineers to instead increase dynamic range so the sand doesn't blow out to white when I take pictures on the beach or the shadows under the rim of my mom's hat go to black. Also speed up the camera so when I hit the shutter, it's instantaneous. These are the kinds of things people will actually notice. They've got no idea what the extra 2MP gets from when choosing between a 12MP and 14MP camera. Mostly because it doesn't get them that much. This is one of those areas where less really does get you more.
Digital SLR I on the other hand would love more megapixels. On the high-end side we've got much bigger sensors so they've got plenty of room to try packing in more pixels. Though there are even limits to that which involve the physics of light and limits of diffraction that no engineering will be able to work around. We need bigger sensors for that, Leaf and Phase have introduced 80MP backs lately, but that gets into the world of medium format digital which we'll talk about some other time.
I like to print big. When I showed my Drabbles series at SoHo Photo in Sept, I printed them at 20x30" and people were getting right up in them. Those prints used every pixel of my 21MP camera and there were times when I would have liked more. That said, I recently printed and showed a 30x48" black and white landscape shot I took of Half Dome in Yosemite and the print is looks gorgeous. And that was essentially a hand-held snapshot. I'd like more pixels but I'm not sure I NEED them in a true sense.
The problem when you start packing them in is that your lenses become much more important. You can record all the pixels you want, but that doesn't mean the image they recorded was sharp and contrasty and in focus. This is where lenses come in and where prime lenses, that is 'not zoom', really shine because they tend to be simpler and designed to do one thing really well versus everything just ok. All of the drabbles where shot with a 28mm prime which is a good lens but not nearly as sharp as the 50mm prime I shot Half Dome with. That's probably much of the difference between the ability to print that big. If you've got a good camera that's 12MP or more, upgrade your glass before you go getting a new body.
Conclusion The practical upshot of all this is that for the vast majority of people and uses, we've got all the pixels we need. I remember reading somewhere that good 35mm film could hold around 18MP. While that sounds pretty good it's alway somewhat misleading to me. I've shot plenty of 35mm film and can tell you that you're not going to blow it up to 20x30" or 30x48". No way in hell. That's medium format and if we're going to honest here, large format territory on film. I make 11x17" prints from my Leica frames and that's the furthest I'll push it.
Moore's Law marches onward as always and things will only get better, and we're now far past the point where digital has surpassed film in measurable quality (One can certainly still make an argument for un-measureable quality). We've bested the resolution of film, color is good, dynamic range is as good. Personally I think they should be better as well. Digital has gotten to the point where it's done being a teenager and has to grow up a bit. To me it should now be about the quality and not quantity from here on out. Give me tools that allow me to do things I couldn't possibly imagine with my current camera. The ability to print bigger is no longer enough.