It depends what your units are, ie mm or inch. If inch 200 is a poor resolution as it means you can only resolve to 0.005 inch assuming everything is accurate. If mm then 200 means you can resolve to 0.005mm which is 0.00019 inch which is not too bad.
My machines are set up in metric and steps per unit are 1600 so the resolution theoretically is 0.000625mm or 0.0000246 inch.
If you need to have an accuracy of 0.001" then you would really need a resolution of 0.0001 to be sure.
The tradeoff on steppers is between resolution and velocity, have a high resolution and your velocity will suffer and vice versa. Devices like the SmoothStepper can help to a certain extent by allowing you to have a high pulse per second but steppers are still relatively slow motors (typically in the 1000rpm range) so you are still in that trade off place.
Servos differ in that the resolution is determined by the encoder count and with devices such as the SmoothStepper you are no longer limited by the kernel speed of the parallel port so you can have the best of both worlds.
As to what Terry was saying, to me it doesnt make any difference if Mach goes over or under to be closest. If you are over on one part it may be scrap, on another under may make it scrap so it all boils down to the previous point, if you need to resolve to a certain figure your steps per unit have to allow Mach to do that.
Hood