Welcome to
RP Alan!
Your solution is not necessarily wrong, but usually not desirable. It depends on whether you like the end result or not...
I'm not the best at explaining the technical stuff, but here's basically what happens:
Increasing the image size like that adds information that wasn't there to begin with. The addition is done by interpolation, which is basically a "best guess" as to what needs to be added.
PS reads the nearest pixels and then adds more pixels based on that information in order to increase the size. What you can end up with is a pixellated image with artifacts.
Have you tried printing it? How does your image look when printed? Have you tried taking the file to a photo lab and having it printed? Is it still clear and unpixellated?
In the end, whatever makes you happy with the image is what's ok. There are no hard, fast rules really - everything is subjective.
Generally speaking, if you are shooting with a digital camera, it's usually best to set it at the highest resolution so that you don't have to increase the size later.