Since you can place your original on a scanner's platen, even a cheap scanner at just 1200 dpi (dots per inch) will give you much higher resolution than any digital camera can.
You can even spend a few bucks, of that $700, and get a pretty good quality scanner that is MUCH higher resolution than 1200 dpi.
I want to capture digital images (jpeg in RGB color format is preferable) of various motifs that are on paper or fabrics. Once I have these motifs in digital format they would be reprinted onto fabrics and other materials. What is my best choise of tools for getting the highest possible image resolution? Some friends have suggested a high-resolution digital camera (5 megapixels, or higher, with 4 or more times optical zoom), others have suggested a high-resolution flat bed scanner with a Z-lid for thicker fabric originals. I would very much appreciate it if an imaging guru out there in the forum could give me some good advice re the best tool for my appliction(also, I'd like to keep the solution at under $700, if possible). Thanks a lot.

Chowhound
Comic Vine
GameFAQs
GameSpot
Giant Bomb
TechRepublic