PPC Keyword Targeting Question

I have a general PPC keyword targeting question.
I run an ecommerce site for collectible toys and have been running an Adwords campaign with mediocre success (slowly moving in to AdCenter and YSM).
I’m wondering if I’m not targeting my keywords enough or targeting products enough.
As a general rule, am I better off targeting the specific products themselves or the sections the products are in?
So say I have a Widgets category and then in that category have products like Small Widget and Big Widget.
Should I even bother trying to target the overall Widgets category? Or should I only target the individual products to get the best conversion rates?

Original post by jpigford