They're all terrible. Soft focus, insane amount of noise, chromatic abberation abound... You name the problem, nearly all the cameras using that sensor have it.

I think you're overstating the problem, although I do agree that there's no sense in these deeper megapixel wars. My 4 megapixel Canon G3 seems to capture significantly greater image detail than I could ever get back when I shot film, which I blame mostly on the ability to instantly review my images and make adjustments. I've got fantastically sharp pictures with lots of wonderful small details and beautifully low noise. However, you still often want to apply a mild unsharp mask just to tighten things up, and I've often seen the "purple fringe" effects if you blow out the highlights.

I won't disagree with you that something seems silly with the new 8 megapixel tiny sensor, but the SLRs with the 6 megapixel sensors seem quite reasonable. You get roughly the same resolution as a PhotoCD scan of a 35mm negative with what appears to be lower noise, better contrast, and better shadow detail. You have to be careful with highlights, just like with slide film. At $1000 for the Nikon D70 body, you're getting what appears to be a very reasonable product that hasn't been deliberately down-featured like the Canon D-Rebel. (This must imply that Nikon has an improved D100 around the corner, because the current D70 bests the D100 in a number of ways.)

I'm still holding back until the software catches up to the Nikon D70, then I'll probably buy one. Nikon needs to develop firmware to address their moire problem if you're shooting in JPEG mode. Likewise, Bibble and Adobe Camera Raw need to get updated to support the D70, presumably including better moire reduction than Nikon does by default. Once all of that is in place, then I'll pull the trigger and turn myself into a D-SLR snob.