1. When to Sharpen
The Unsharp Mask in Photoshop works by changing the contrast of pixel edges in your image. Sharper images have more contrast. Note that this should be the last step in your digital image process. Repeated sharpening can degrade your image, as it is a destructive process. I recommend working with a copy of the original file.
After opening your image and making any size, color, curves, tone, or other adjustments, select Unsharp Mask from the Sharpen menu (Filter -> Sharpen -> Unsharpen Mask). When the Preview box is checked, you will see a zoomed-in sample of your image in the preview box as illustrated below.

2. Unsharp Mask Controls
Amount - This refers to the amount of contrast and the setting increases or decreases pixel contrast. When the amount is set too high, you will be able to notice a halo effect around edges in your image.
Radius - This setting affects the sharpening width. The larger the number, the wider the area that is adjusted and when too wide, the image will appear over sharpened as seen here.

Radius and amount work together, or against each other, depending on how you look at it. One setting offsets the other.
Threshold - This controls which pixels the Unsharpen Mask will affect by analyzing the amount of contrast between adjacent pixels. For example, if I enter a value of 4, then a pixel will only be sharpened if a difference of at least 4 tonal levels exists between it and neighboring pixels. Setting this value too low, will result in sharpening areas that should remain smooth such as the sky or water.
3. How Much to Sharpen
There is no magic combination of settings that will work for all images. The sharpness of the original image is perhaps the most important factor. Another factor is the amount of softness that will be introduced when the image is printed.
One recommendation is to set Amount to around 300 and then manipulate Radius (beginning at 0.7) and Threshold until you are happy with the results.
