I was taking some stills with my XM-2 when I started to wonder what the real difference between fine and standard quality are. Is it worth using fine over standard all the time?

Personally I always go with the best quality a photo camera has
to offer (which includes the options on a video camera like this).

If you can't store enough photos get a bigger card, they are very
cheap these days and a 128 or 256 MB card should allow you
to store enough photos for a one day shoot easily.

Fine just uses less compression, so file sizes will be better, quality
will increase and compression artifacts will decrease.