koulaid- Megapixels only matter if you're going to enlarge the image significantly, or do a major cropping. Good advice on sun angles.
Vinny- I use the same camera for fishing pictures. A good setting for pictures is the Shutter Speed Priority. On a sunny day, set the ISO to 80 or 100, flip up the flash, and set the shutter speed to at least 1600. The SX120 IS has a cool timer feature on it called FaceSelf-Timer. When the camera detects a face, it will take however many pictures you set it to (1-10). It's a good thing to use. You can press the capture button and get set-up in the position you want, then look at the camera so it detects your face. I set it to 10 pictures, so you can get alot of the fish-holding positions, ie. vertical, horizontal, diagonal, etc. With the flash, there is about a 3 second delay between pictures, so you can change grip, hands, fish position, etc. If you're not confident in the set of pictures you took, do it again.
I have found the pictures I take under trees (shade) to come out better. The bright-sun photos make my shirt blurry. I'll have to figure that out.
Oh, also, like Bass_Akwards was saying, the background really is what makes the fish blend in or really "pop". Wearing a black or dark green shirt is going to "ruin" the picture. Colors like purple (that's why I always wear the baseball shirts for my school), yellow, blue, grey, red, etc. are going to be much better than dark colors.
Hope this helps some, Bass_Akwards is the expert on this!