Image resolution should be 300dpi for a size-for-size printed image.
Photoshop and other paint type programs are not ideal for setting type but if you want to use this type of software it is important to set the size of canvas and resolution before you begin to place type.
If the image is to be placed into other software for layout - InDesign, Freehand, Illustrator or Quark for example - you can prepare the image exactly as you want it to appear. If you are going to print directly from the image file please see our notes on bleed and tick marks.
It is safest to flatten the image to a tiff before you send it for print - that way there will be no font substitution or transparency problems.