From what I’ve heard the D40 is a great camera too – but as with the compacts the lens is the key component. More about this in the forthcoming 40D review.

I know nothing about photography either really. I purchased a compact camera with requirements that emphasized good flash-free performance (so high ISO equivalent ranges), very good zoom, image stabilization, and not much $$ and came up with a Panasonic Lumix TZ3. It’s nice, compact, unobtrusive, and usually takes very clear pictures but gets noisy in low light.

For an SLR I went for a D40 based on the same requirements, probably with an emphasis on cheap-ass. It turns out it’s very hard to be unobtrusive with an SLR. Even if I stand in the distance with my Nikon 18-200mm VR lens an SLR makes everyone assume you’re photographing them because you’re a photographer (if that makes sense). It is nice and light, shoots raw fast and fine JPEG faster, and the lens is versatile but no good for indoors or flash photography unless I manually deflect the flash. Wildlife and unposed family shots are its forte.

I don’t know much about the TZ3 but the new LX3 looks awesome. f/2.0 wide angle lens with image stabilisation FTW.

I was tempted to go for a Ricoh digital but in the end wanted something small enough to really fit in a shirt pocket so I went for a Sony DSC W300 instead. Having seen your review I’ll get on and write up the pros and cons in a similar way.

As you hint, the ability to use a wide aperture to limit depth of field, is very important for many striking shots (such as your flower shot above). Many small digital cameras have wide angle lenses combined with small aperture which means that everything is in focus. (Presumably this makes the auto-focus easier to implement too).

The problem with noise at high ISO levels is due to the sensor size, or more specifically pixel density. Because the sensor on compacts is significantly smaller than the one on a DSLR the sensor pixels are that much closer together. When you push up the ISO level each sensor point is that much more sensitive and is more likely to capture bits of the light falling on adjacent points. This leads to a noisy picture.

Which until someone invents a new kind of sensor means that all ’small’ cameras are going to have this problem. I regularly shoot at 1000 ISO on my 40D and don’t have a problem. Although I am jealous of the Nikon users – their most recent models apparently show with low noise at incredibly high ISO values.