Simply said - higher bitrates = higher quality and bigger filesize. But it depends also on the codec. Newer codecs provide better quality at low bitrates than old codecs at high bitrates. And for the question how high or low a bitrate should be - like always, find the golden middle, in this case between quality and filesize.
It should also be said that, beyond a certain point (different for every video), increasing the bitrate will not result in any noticeable increase in quality. This is why EADFAG recommends you use Q2 as your minimum quantizer in XviD, rather than Q1 -- while Q1 does provide more exact results, the difference is so slight to the human eye as to be not worth the difference in filesize.