The number of megapixels is only one of many factors entering into the clarity of photographs. The size of the sensor and the quality of the lens are at least as important, at least above a certain megapixel threshold. For most people's needs (like printing up to 8"x10"), eight megapixels is above that threshold.
The size of the sensor relates to the camera's ability to collect light. The larger the sensor, the more light it collects. The more light it collects, the less likely you will see more noise, perceived as "graininess," in the resulting photo. This may be what you are confusing with pixillation or a lack of resolution.
The tiny lenses in compact cameras may also be a factor. Better lenses make for better pictures. My old Nikon D50 six megapixel DSLR takes better, clearer pictures, even when printed in 8x10 format, than any of these newfangled high-megapixel compacts I have yet seen.