This is probably digging up an old subject but I wasn't aware people were making a big deal about it until recently.
It doesn't matter how high of a megapixel count you have, picture quality depends on the aperture quality of the camera lens, which will never be close to good with these small handhelds and phones. That new 12 megapixel Samsung camera phone will still produce grainy images. This is along with cost is probably the reason that led to Nintendo's decision.
Megapixels with the proper equipment only matter when dealing with on the professional level when needing to crop or print wall size images with great quality. What do I know I only have to work with this stuff on every other project.
Well, I dont think its been an issue in this thread, but your points are well received. Nintendo has never played the technology fight. One of the first points in the PR for the DSI is that the camera takes pictures at twice the resolution that the DS screen could display.