That all depends on how smooth you want it to look, and how large of an area you have to cover.
If you want to cover a 2 kilometer wide area because you're making a racing game and you don't want the player to be able to see past the edge of the terrain, but you also don't want to stick giant mountains right next to the track, then a 1024x1024 heightmap might make sense.
Also if you're using a Blitz terrain, with a high res heightmap the terrain can be very smooth up close and yet still not use a whole lot of polygons. But if there's not enough height data to have a height change every meter, then you're not gonna get that kind of resolution up close and Blitz will just waste the extra polygons or use them farther away. I think it just wastes them. (Ie, uses a higher res grid but only does linear interpolation so the height changes are still rough.)
Anyhow, what they said is true. If your game looks fine with 256, then why are you even asking? :-) If you like how it looks then there's no reason at all to use more polygons just for the sake of using more.
If you want to cover a 2 kilometer wide area because you're making a racing game and you don't want the player to be able to see past the edge of the terrain, but you also don't want to stick giant mountains right next to the track, then a 1024x1024 heightmap might make sense.
Also if you're using a Blitz terrain, with a high res heightmap the terrain can be very smooth up close and yet still not use a whole lot of polygons. But if there's not enough height data to have a height change every meter, then you're not gonna get that kind of resolution up close and Blitz will just waste the extra polygons or use them farther away. I think it just wastes them. (Ie, uses a higher res grid but only does linear interpolation so the height changes are still rough.)
Anyhow, what they said is true. If your game looks fine with 256, then why are you even asking? :-) If you like how it looks then there's no reason at all to use more polygons just for the sake of using more.