Photoshop works primarily with pixels. Illustrator works primarily in vectors. However both programs have some capacity to deal with pixels/vectors.
When selecting an image for a project you must have the answers to the questions below:
Best print quality is 300ppi(dpi), however you can sometimes get a good print as low as 150ppi. The only way to find out is to do a test print. Your test print must be the same length and width as it will be in the final design.
If your image will be only be seen on the screen, you can go down to 72ppi/dpi. Sometimes higher resolutions will look worse on screen.
If you will use the image for both screen and print, you will need a high resolution image. You can easily reduce to resolution on Photoshop for screen.
Here is a great explanation of image size and resolution.
BE AWARE, the technique he uses at the end of the video will just make the pixels look blurred. You CAN NOT add detail to an existing image.
If you want to try this with a low res image, you need to do a test print to check the print quality.
This image explains how to check the size of an image in Photoshop.