This thought was developed when I looked around for a point-and-shoot camera.
When the Canon G11 was released it had "only" 10 megapixels to its credit. The model before that, the G10, had 14 megapixels. This maneuver was done to improve the quality of the pictures and the camera's low-light performance. Based on the reviews I've read online, the G11 really did well on both accounts. The latest iteration, the G12, also has 10MP.
So, this is my theory: say you have a 14 megapixel camera - I think that you would be better off with setting it to a lower megapixel setting. I don't have a point-and-shoot right now because the one the wife and I had gave up the ghost, so I shot a couple of pictures with my DSLR. I shot JPEG with no noise reduction processing in-camera nor in post. One shot is an 18MP shot while the other is an 8MP shot.
The question now is, can you guess which is which... :)
Both shots were taken at ISO6400.
(PS. I have to admit, the Dual DIGIC 4 processor of the 7D really did a good job of reducing the noise. So the only way for me to answer this is to have an "ordinary" point-and-shoot.)