I inherited a Panasonic digital camera that has a resolution of 640x400 (or 640x800 - can't recall) - less than 1 megapixel. I was wondering how can I best utilize it to make shots for my models? There's no close-up feature but I want to make close-up shots. Any ideas? (aside from getting a newer camera - they cost an arm, a leg, a car and 3 mortgages on the house to buy :-) ).

If the lens has a zoom feature, back away and use a longer focal length. That can sort of approximate a macro setting. The picture size is adequate for posting on-line but will lose much resolution if you crop and enlarge the image or tey to prinnt much more than a snapshot sized print. If there's no zoom or macro (close up) feature, you're going to have a hard time getting good, usable pictures of your models.

Actually it's 640x480

The non-closeup issue is a big challenge. These cameras are designed to take pics from 3 feet away and farther. That's quite a challenge. Two things that you would need though, to maximize these handicaps are...

1. A very steady hand. Nothing beats the clarity of a steadily shot pic. If you don't have one, mount it on a tripod and use the cam's timer, if available. If you dont have either, rest the cam against something solid when taking a shot.

2. Very bright ambient lighting. These cameras were designed to imitate ASA 100 film, which is only effective when used outdoors under direct sunlight. Utilize as much sunlight as possible when getting shots of your model. Otherwise, use a lot of desk lamps to exert a concerted effort in producing a clear picture #:-)

Just my $0.02

You can try buying additional lenses (if your camera supports them). They fit on your camera lens, are inexpensive and can definitely do the job... Usually they came in sets of three marked +1, +2 and +4.
Ciao