My 2c-worth: Based on my experience with a 4Mp Ricoh pocket camera:
- totally avoid digital zoom - the quality is horrid
- therefore the camera has to have optical zoom. 3x works well enough for most needs
- can print up to A4 for home use quite well
- Ricoh put lots of SLR-type adjustability into their pocket camera, so that helps
- it's cheap if it breaks, or gets rained on, etc.
- I still carry it everywhere - a few of my best photos were unplanned.
So - I can believe 7Mp would be a reasonable limit for good sense in a pocket camera.
I agree with rrcaniglia about leveraging high resolution / high pixel count to zoom in - I do this on my DSLR and it saves me having to swap lenses - or, as recently, capturing birds landing when I couldn't be sure just where the subject would be! But this is with a good, big lens and a good camera. I can believe what others say, that a pocket camera doesn't deliver the quality to be able to do this no matter how high the pixel count.
All IMHO of course!