Question About Images - Canon Power Shot A 510 vs. Olympus Stylus 720

I'm new to digital photography. Last year, I was given a Canon Power
Shot A510, which has a maximum 3.2 megapixel capacity. I finally used
it a few months ago when we had some visitors, and I was surprised at
the quality of pictures I got. I have an old Canon S600 color printer,
and, while my guests and my wife were out, I printed several 8X10
pictures of the visit -- again of surprising quality (better than some
I've gotten from film prints). Anyway, that whetted my appetite for a
camera that would produce images in finer detail. I also wanted a
camera that was even more compact than the Canon.

A few days ago, I bought an Olympus Stylus 720. It's small, and in its
high definition mode will make 7.2 megapixel pictures. That's fine, but
I have a problem with the size of the pictures I can print with it.

Using Adobe Photoshop, the Canon will make unedited prints that are
larger than 8X10 at 180 pixels per inch. The Olympus, even with its
greater megapixels, will only make prints that are less than 8X10
(about 7X9), at 314 pixels per inch. If I try to adjust the pixels per
inch, it reduces the megapixels, but makes no difference to the size of
the Adobe print. What is going on? Why can't I produce much larger
prints with the Olympus than the Canon?

Thanks for your help.

Wexford