(2-part post):
I think the phrase 'Read the handbook!' is appropriate here ;-)
No, I'm not trying to be awkward but, since I've not got the same camera as you, it's difficult to know exactly what you need to do.
Any 8Mp camera, from a respected manufacturer like Olympus, should offer the ability to change the image size and/or quality. The smallest image size offered is often 640 x 480 pixels. This is the same sort of image as you'll get on a cheap digital camera, for around a tenner, from your local market. It's good enough for web images on, say, eBay but looks rubbish when printed out.
The next standard size, on most cameras, is 1280 x 960. That's good enough for most web purposes and gives reasonable postcard-size prints.
Next comes 1600 x 1200. That's what I normally use on my camera. Print quality is pretty good up to A5 size.
2048 x 1536 is the next standard size on many cameras. It's the image size I'd choose for A4 prints.
Beyond that, you've got image sizes such as 3200 x 2400 and 3720 x 2800. That's probably what your camera will use by default but, as explained above, it's totally unnecessary.