I just did a little up-resolution test with Lightroom. I picked a Flickr picture (not mine in case my registration affected how easy it was to "borrow" something). The picture had no copyright or watermark on it. The picture was of a dragonfly with max dimension of 440 pixels. I resized it to an 8x10" at 360ppi. At that amount of resizing (8.2X), the resulting image was noticeably soft and not something i would want to print.
So i went back to the same Flickr site and noticed that I could click on an enlarged size that provided a 1064 pixel max dimension. I borrowed that image and resized it to an 8x10 at 360ppi. Resized the maximum dimension was 3600 pixels or 3.6X the original size. The resulting image at was clear and sharp and suitable for printing. (To complete the test, i deleted the two image sizes i had borrowed :-))
I have one of those "proof" watermarks all the way across my website images and its way ugly. I think the way i'll go is to limit the size of the shown images to 500 or less pixels and perhaps put a small watermark in the corner.
Yes, i know, watermarks can often be removed with a little work, but all i have to do is make it more difficult than the majority of flickr accounts, and thieves will tend to go there instead :-)