You can manually specify how you want Google to interpret url parameters using Webmaster Tools: http://googlewebmastercentral.blogspot.com/2012/08/configuring-url-parameters-in-webmaster.html
As Jeff says though, for most sites I leave that setting at “Let Google decide how to interpret the url parameters” and seems just fine.
However, this doesn’t apply when two pages have similar content but different urls (not counting the url parameters). For example foo.com/category1 and foo.com/category1/latest will be seen as different pages, regardless of how you tweak the url parameters settings in WMT. The OP is correct that it’d be best to specify a cannonical URL for any two pages that have distinct urls and identical or nearly identical content.