Is this a good digital camera?

http://shop4.outpost.com/product/4037792

I was surprised at how cheap this PANASONIC DMC-F1K 3.2 Megapixel Digital Camera was. It’s only $177. I don’t know much about digital cameras, so I would appreciate it if someone could answer my questions before I buy it:

1.) Why do you need a camera above 2.0 megapixels? Don’t 2.0 cameras already takes pictures that are bigger than the computer screen?
2.) My previous camera blurred with the slightest movement. Is this camera good for taking sharp pictures?
3.) Is Panasonic reliable?
4.) How’s the macro on this thing?