The most fundamental thing that you’re doing wrong in this instance is that you’re trying to scale the canvas rather than the model. That causes pixelation. While in Edit mode, you will see a Scale button on the right shelf (there are also Move, Spin, and Rotate buttons). Click on the Scale button and drag up or down to resize the model.
You can also use the Alt key.
If you hold the Alt key while clicking and dragging on the canvas, you will move the model around the canvas. If you press Alt, click, release Alt, and then drag you will scale the model instead of moving it. (This sounds much more complicated than it actually is :))