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The title really says it all. I want to design a poster for my home. But here's my question, if I lay out the text in photoshop, save it and then print it - will the text look pixelated? Or sharp enough like how in posters text normally does?

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If you're sending it to be printed, then save the file as a Photoshop PDF. All your vector information, including text, will remain vector.

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I had no idea you could do that in PhotoShop now. Nice tip! – DA01 Apr 9 '12 at 2:40
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It's useful if you're placing a Photoshop comp into an InDesign layout, also. Text in a placed PSD will render at image resolution in the printer's RIP, rather than vector resolution (typically 2400 to 2800 dpi going to the plate). If it's placed as a PDF, the text will render at the platesetter's or imagesetter's full resolution. – Alan Gilbertson♦ Apr 9 '12 at 3:01
*PDF will also retain font hinting for smaller text sizes. – Scott Apr 9 '12 at 7:16
Thanks for the great tip guys! – alvasrawuther Apr 9 '12 at 12:27
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It depends on the resolution you create the photoshop files as. If it's a high enough resolution, the pixels are small enough that your eyes won't see them as individual pixels.

For photographic imagery being printed, the typical resolution is 300ppi (pixels per inch). For line art and type, 600ppi is likely a minimum resolution. 1200ppi being typical for higher-end printing.

I'd do a test print at 300ppi and increase the resolution up until you think it looks good.

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I am doing sort of a grunge poster with type on top of it. Suppose I make a 6ft by 3ft poster - will printing it in 600ppi be enough? And the 'ppi' value, the print company will look after it, no? Or would I need to use Illustrator for type? – alvasrawuther Apr 8 '12 at 16:23
There's lots to consider. A poster that size is likely going to be seen from a distance, so you can likely get away with even lower resolutions than 300ppi. Your printer will handle the printing, but you have to be sure to give them a file with enough pixels in it ;) If you have access to Illustrator or the like, yes, setting the type with that (on top of your imported image) will produce crisp type. – DA01 Apr 9 '12 at 2:40
If I want to print at say - 300 ppi, will I then have to while making the poster in photoshop set the resolution to 300 pixels/inch instead of 72 pixels/inch which is the default? – alvasrawuther Apr 9 '12 at 6:32
That setting just tells PhotoShop how large to print your file. You can change it, but the key issue is that you have enough pixels. If you want a 300ppi image, and it's 6' wide, that's 72(inches) * 300(pixels) = 21,600 pixel wide image. – DA01 Apr 9 '12 at 13:00
Maybe I am getting confused. Here I'll put it simply - if I want to print a poster at 300ppi, will it help that I use the 300 pixels/inch setting in Photoshop? or it will be fine with 72 pixels/inch? – alvasrawuther Apr 9 '12 at 13:04
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