0.0007" Resolution for Z axis, good enough?

I'm trying to convert my mill/drill to DRO on the cheap (being a college kid and not having much cash to spare), and right now I've got the option of doing it with 0.0004" resolution on all three axis for $350 or 0.0004" on X and Y and 0.0007" on the Z for $300. Is the higher resolution on the Z axis really critical for general machining? I'm new to machining, so I thought I would ask everyone on the list for input and thoughts.

John

[Non-text portions of this message have been removed]