DPI stands for Dots per inch. All pictures on your computer are made up of many tiny dots. If you look closely at a newspaper you can see the tiny dots that make up those pictures. From a distance these dots blend together and make the picture look solid. When scanning pictures they can be scanned with a different amount of dots per inch (dpi). One important thing to remember when increasing the dpi is that for every time you double the dpi you quadruple the file size. For those with limited space to save pictures on your computer and especially anyone that wants to use the picture on a webpage it is very important to keep file size down. Unless it is real important to have a picture at a high resolution on a webpage it is mostly better not only for keeping your webpage storage space down but also for a quicker download for visitors that your webpage have small file size pictures that download as soon as possible. Another thing to consider if you decide to go to a higher resolution is that standard VGA resolution is about 640 x 480. The max resolution is mostly about 1024 x 768. A 5" picture scanned at 60 dpi would fill about half of the screen for someone with a 640 x 480 resolution. Thus a higher dpi level would only increase file size and not be visible on just one screen.
Here are some example screen shots.