That's a nice photo, don't cut yourself short
It depends on the photos I'm taking, and the format they're in. If I'm just shooting Jpegs, and I've got to resize down anyway to fit on the screen, usually I'll do all my levels, colour, brightness, contrast adjustments, etc. in Photoshop on the full size image. Then I'll run an unsharp mask (Amount 500%, Radius 0.2 Pixels, Threshold 0 Levels), then resize and start fine tuning the sharpness a bit more at the final size.
If I'm taking photos in RAW, I'll use the Nikon Capture & Nikon View editors to tweak it. There's a lot you can do with RAW files that you can't do with JPGs because of the way they're structured (like vast improvements on white balance adjustments for example)...
Again, I may use Nikon View Editor's auto-contrast on JPG or TIF files before saving out to further edit in Photoshop, but if the original is a JPG, I'll save it out as a format that doesn't use any compression, to prevent further loss of detail.
Where quality is key, and the image is ultimately intended for print, or it MAY ultimately be printed, I'll shoot uncompressed TIF or RAW format. Then you don't get the artifacts showing up that you do with JPGs. Of course, a 3008x2000 JPG can be as little as about 6-7Meg, a 3008x2000 TIF is gonna be nearer to 25-35Meg, which implies there's a big difference in the amount of detail captured.
It basically boils down to the ultimate intention for the image really. For the screen, I'll often do a fair bit of post-processing to fix the colours better for the screen, sharpness at a smaller size, etc. For print, I may fix the white balance, and sharpness a lil, but other than that, I don't do much editing to them.
I just had a lil read up on your camera (Olympus C4040z right?), you can take TIF images up to 2272x1704, which should be good enough for a medium quality 8x10 print. You'll only get one TIF image of that size on a 16Meg Smart Media, so I hope you've got one with a lil higher capacity laying around, hehe - if you're going to be post-processing your images, TIF is definitely the way to go.
Now, a couple of things with your camera...
White Balance - it says here that it has built-in presets, and that compensation is available, but it doesn't say if you can program your own preset (which is the best thing to do much of the time). The general setting for outdoor sunny pictures that the D100 folks recommend is Cloudy with -3 compensation - rather than using the "Sunny" setting. It seems to give a more pleasing appearance, so give that a try and see what happens. If you can manually preset a white balance to use for a shoot, let me know and we'll go into that a lil more.
Flash - You've only got a built-in flash, with no shoe on top to mount an external flash. Lighting can be a tricky subject then. If you can pre-program your white-balance, then head down to Home Depot, and get a couple of those $10 halogen work lamps. They're like 500Watts each, so they get REAL hot, but if you're just using them for small amounts of time for a little supplemental lighting taking photos in the back yard or whatever, then they can work out real good to make sure your subjects are well lit, that there's no harsh shadows, etc. Depending on your camera, the halogens might make your images appear a slightly funny colour (especially if you can't manually preset your white balance), so some post-processing may be in order - You'll only really know how your camera's built-in white balancing compensates for this after you've taken a couple of photos. But take them in TIF format, so that you can post-process them later with minimal loss in quality.
Other than that, there are slightly more expensive basic studio lighting setups you can get. You can get a basic 2 light setup with the umbrella reflectors that are always-on for about 100-150 bucks if you hunt around on eBay. You can also get a similar setup, that is triggered from the built-in flash on your camera for about 200-300 on eBay.
The latter has the advantage that it isn't on ALL the time, and so doesn't build up heat. Because of the amount of light they have to give off, lights that are always on can produce a lot of heat very quickly, and in a studio setting, it can become unbearable after a rather short amount of time unless you have lots of windows or doors open and it's cooler outside (and not windy, heh).