800x600? Yikes, that is tiny - smaller than what I use when emailing downsized photos. I just uploaded a file to my print supplier for a 24x36, and it was 4000x6000 pixels and I was worried that it was on the small side.
-edit-
To answer your original question though, what "should" you be doing? That is really on a per photographer basis, but if it were 2005 again, I would say get an Espon printer, print your own photos; however it is 2005, and using someone like MPIX.com is definitely cheaper. I would not put anything out there in client's hands from Walgreens or Walmart, since they can just look on the back and think to themselves "I could have done this myself". When you get them from MPIX, they are on professional paper, not just whatever is cheapest to buy for Walmart consumers. Also, you get many other options like custom coatings, paper types, framing, canvas mounts, standups, etc...
If not dealing in volume, then print your own...if you print more than 100 prints a month, I would use a service like MPIX.
As far as the size thing - yeah, why size down then print? Why not just print from the source file? If anything it just seems like more work that you do not need to do.