This is for CS and CS2, not sure about newer versions.
When you want to reduce an image, go to the Image> Image Size menu. Click on Resample Image and choose Bicubic Sharper from the drop-down menu. This is the best setting for making sure that an image doesn’t blur.
To set it as the default, go to Preferences> General and you’ll see Image Interpolation and there you can pick Bicubic Sharper from the choices.
Another thing to keep in mind when resizing is to try to do it only once on an image. Many people will resize repeatedly as they search for the perfect fit for a design element, and then end up with an image with a lot of blur. It’s always better to experiment on a duplicate of the image. Then, when you’ve settled on the final dimensions, you can go back to the original and resize it just once.
Never resize a GIF image. First change the mode to RGB Color (Image> Mode> RGB Color), and then resize. You can still save your resized image as a GIF, just do not apply resizing while the image is in the GIF mode.
Note: From http://www.photoshopsupport.com/tutorials/jennifer/bicubic.html
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