A couple of things:
First resolution. 300 dpi (dots per inch) is the best resolution ot use. It is what is typically used for commercial photography and provides excellent results on inkjet printable fabric.
Inkjet vs laser. If you want a soft, easy to sew, color fast piece of fabric with a good hand AND a high quality image, then inkjet printable fabric is the best choice for the home sewer. The reason is simple. Good inkjet printable fabric has a chemical built in that binds the ink molecules directly to the fibers in the fabric. This provides a good hand and makes it color fast.
Any heat method, laser, iron on etc. lays the ink on the fabric then uses heat to fuse it to the surface. We've found the result to be stiff (in some cases they smell wierd) and they tend to crack when washed.
I have a great Epson inkjet printer and an great Xerox color laser. If I want high quality photos I use the Epson with the manufacturer's ink and the proper photo paper or inkjet printable fabric. If I want to print our brochures and design booklets, I use the color laser. Pick the proper tool for the job.
Concerning the quality of the finished product. We feel and our customers agree that the quality of the image and the quality of the fabric on our samples are superior to anything out there. Visit us at one of our shows and take a look for yourself.
Finally, we've tested just about every method of getting a picture onto fabric, including laser, heat transfer, chemicals you add yourself and using inkjet printable fabric. From the standpoint of image quality, hand, washability etc. nothing can compare to inkjet printable fabric for quality. We like Color Plus fabric but there are others out there.
The only thing that we found that is superior is a commerical process called dye sublimination. This requires color separations and equipment that is significantly more expensive than an inkjet printer.
Guidelines for good quality printing on fabric:
Start with a good picture. It should be sharp, have good contrast and a resolution of about 300 dpi. Images that look good on the web generally don't have the resolution you need for printing on fabric. Typically the size of the image is in the 150k to 300k range and the dpi is 72. Good images for printing need to be above aout 1M and have a dpi of 250 to 300.
After I do any picture editing and am satisfied with the results, before I print the image I increase the color. This gives the printed result a little pop. In the current version of Photoshop or Elements the best tool is VIBRANCE and you can increase the vibrance by about 80%. If you can only control color saturation increase the satuartion by about 10% to 15%,
Use a good quality inkjet printable fabric. It should have a thread count of 200+. We like Color Plus fabric.
Use only the manufacturers ink. Don't use refillable ink or "compatable" ink.
Print at 300 dpi
Set your printer to plain paper best quality photo. Don't use the photo paper settings (gloss, matte etc.) Those settings put too much ink on the fabric and will reduce the quality.
With inkjet printable fabric you print directly on the fabric so load the sheets accordingly.
Allow the printed fabric to completely dry before removing the backing and using it.
ALWAYS FOLLOW THE MANUFACTURERS DIRECTIONS
Come see us at a show or check our web site for products and hints.