I don't know if this belongs in StackOverflow or some other SE site, but here goes.
I have a PSD design I have an iOS development team turning into a Retina iPad app. However, this design is made in the default 72 dpi.
The development team is now saying the design should be 264 dpi (same as a Retina iPad) -- as well as a 132 dpi version for the non-Retina edition.
This confuses me, as I was under the impression that dpi just represents how many pixels go into an inch of output, and therefore would only matter in printing. The dpi of an iPad just represents the number of pixels for each inch of screen, and therefore doesn't according to my brain have anything to do with the dpi of the PSD. Especially since it already is in the 2048×1536 size required for Retina.
I told them this, but they insist, which has made me doubt my own infallibility.
Who's in the right here? Does the dpi of the design file have anything to do with the dpi of the device? What would make an otherwise smart dev team think this?
The DPI of your Photoshop file does not matter. You can go into Photoshop and change the DPI to whatever you want. Going from non-Retina to Retina is "sort of" like doubling your DPI, however.
If you've already created a design assuming a 1024x768 resolution for the iPad, you will need to recreate the design to at 2048x1536. Where the concept of dpi comes into play is that the density of data should remain consistent at both retina and non-retina resolutions. You'll just need to recreate each bitmap-based element in your file at 4 times the resolution you originally had if you start with a non-retina file. It is sort of like going from 72 dpi to 144 dpi.