I break digital cameras down into three categories

• Point and Shoot
• Extended Zoom
• Digital SLR

Each camera type has distinct advantages and disadvantages.  Which is right for you depends on your skill level and how you will use the camera.  Here are my thoughts.

Point and Shoot

These are the super thin cameras you see at your local WalMart or BestBuy.  Some are not much larger than a credit card.  The common characteristic of these cameras is ease of operation.  They take the guess work out of photography, you basically point the camera at the subject and shoot, thus the term for this category. 

What to look for in a Point and Shoot:  There are about four traits that I would zero in on when selecting a P&S camera.  

• First is the number of megapixels the camera can save at. Here is the deal.  Unless you are going to print large format posters or you are shooting for stock agencies, you really don't need a huge pixel count camera.  A five megapixel camera can produce images you can print at 8.5x11 with good quality.  The advantage of a larger megapixel camera is cropping.  You have more picture area to work with as you trim your images.  Seven megapixels seems to be standard now. That is more than enough for this class of camera.  These cameras almost always capture in JPEG file format so expect to find that as the standard format. These digital cameras have a small amount of internal storage, so expect to purchase a removable storage card.  I recommend at least a 1Gig card.
• Second is the zoom.  These cameras seldom have larger than a 4x optical zoom with 3x being very common.  Almost all will tout a digital zoom capability. Digital zoom is worthless.  You are doing in the camera what you can do in your graphics editing software, so disregard digital zoom as an evaluation factor.
• Third is ISO range.  Until recently, these cameras were really restricted, but the newer models are offering a much wider range, some all the way up to 1600 ISO.  This is important if you are in low light situations or if there is movement involved.  It helps to be able to bump up the ISO which gives your more flexibility to shoot in low light or if there is a lot of action in the shot.
• Fourth is the LCD and there are two important factors to look at, size and brightness especially in sunlight.  With these cameras, you seldom look through the viewfinder to take the picture, instead you use the LCD. So it needs to be large enough for you to see the what you are imaging and bright enough in all lighting conditions.  Try out the camera in sunlight if you can. That is the acid test. I would recommend a 2 inch LCD as a minimum. Some cameras now come with 2.5 inch and larger LCDs.

A recently new innovation to hit this class of camera is Image Stabilization.  If you always shoot with a tripod or have exceptional nerves, then this is not an issue.  However, if you are like a lot of us, we use this camera freehand.  That lends itself to movement of the camera, especially as you click the shot.  Image Stabilization goes a long way toward solving that.  You won't find it in all models, but it is becoming more common. 

Who should buy the Point and Shoot?  There are really two areas where this camera excels.  I think this is a good second camera for someone who wants to have a backup or an easy to use alternative when you just don't want to tote a big camera and all the gear around.  It is also a good camera for the person who just wants good photos without the hassle and expense of higher end gear.  You can get perfectly acceptable results using these and don't have to shell out thousands of dollars.

What the Point and Shoot is not for.  The biggest complaint I hear about these cameras is the delay. You press the shutter button and a second or two later you hear the click.  It is getting better, but you still have the delay.  So if you are buying this camera to capture good pictures at your childs sports events or to get shots indoors at a basketball game for example, it just won't hack it.  Move on to a hgher end model. 

Look to spend between $150 US and $400 US.

Extended Zoom

These cameras have three significant traits that set them apart from the Point and Shoot cameras. They have longer zoom capability typically up to 12x optical, they have an LCD that can be flipped out, rotated, etc and there are more options in your control when taking pictures.  With these enhancements, comes an increase in size, weight and of course price.  Expect these cameras to be about twice the size and weight of a Point and Shoot and to cost between $300 US and $500 US.

What to look for in an Extended Zoom.  Most people who buy the Extended Zoom do so for the zoom capability, but there are other important factors to consider to. 

• Look for something around a 12X optical zoom and make sure you are looking at Optical Zoom not digital zoom when comparing.  
• Another key feature to look for is Image Stabilization.  Because you are going to be shoot objects at a further distance, a way to stabilize the image is important.  A tripod or built in image stabilization are your only options. 
• As with the Point and Shoot, expect to find most of these cameras offering around 7 megapixel resolution which is plenty even for the most avid photographer.
• When comparing, look for a fairly dynamic ISO range, try for 100 - 1600 this gives you more options in low light.
• The LCD should flip out and swivel.  Be sure to check the image in bright light. 

Digital SLR

Digital SLRs are at the highest end of the digital camera spectrum. They feature interchangable lenses and multiple shooting modes and are of course the most expensive of the group. These cameras typically function very similar to film based SLRs.  So if you are familiar with those, you should be right at home with the digital SLR. 

Digital SLRs are for the true photo enthusiast.  Operation in automatic mode is essentially the same as for the Extended Zoom cameras.  However, these cameras offer the ability to customize the way you shoot.  You can shoot in any number of Program Modes, in Apeture Priority Mode, in Shutter Priority Mode and in Manual Mode.  Digital SLRs give you the ability to be in control of the camera.  Along with that control, comes a requisite level of expertise. 

Digital SLRs start at about $800 and go well into the thousands depending on speed, megapixels, and quality.  The camera itself is only a fraction of the cost.  Most of your money will be invested in lenses.  It is not at all uncommon to see a $5,000 lens on a $3,000 camera and most photographers have multiple lenses.

Who should buy a Digital SLR?

The Digital SLR is for the photographer who needs to control the camera.  If you are shooting for Stock or semi professional, then you need to go ahead and make the leap into the Digital SLR arena.  Also, if you are shooting sports where quality is important, then this is the only way to go, just be prepared to invest heavily in lenses.