Here's my understanding of this process:

A high-quality print process requires your "Document Size" resolution to be 240 pixels per inch (ppi). A 300ppi is even better. You can check the Document Size in Photoshop from "Image -> Resize -> Image Size" menu.

Your 40D makes images with the maximum size of 2592 x 3888 pixels. That means, without resizing the image, straight from the camera, your maximum printed image size can be 10.8" x 16.2"

2592p / 240ppi = 10.8"
3888p / 240ppi = 16.2"

If you want to print it larger, then, obviously, you must resize the image in Photoshop. What's important is that you don't decrease the "Document" resolution below 240ppi.

For example, you'd like to make a 16" x 20" print. Your image resolution must be 3840 x 4800 pixels.

16" * 240ppi = 3840 pixels (height)
20" * 240ppi = 4800 pixels (width)

Here's the resizing procedure in Photoshop (Elements or CS) that you must follow.
In the "Resize Image" window:


*Enable "Constrain Proportions" option
*Enable "Resample Image" option, so that the Document Resolution will remain at 240ppi
*Select "Bicubic Smoother" option
*Specify the "Document Size" height of 16 inches (notice that your width will automatically change to 24 inches.

Since 16" x 20" aspect does not match the original document ratio, you must crop it manually.

As a last step, sharpen your image using your favorite sharpen method.

If your print shop allows "TIF" files, save your file as "tif" with no compression, otherwise, stick with JPG, highest quality.

I hope this wasn't too confusing.