My 2 cents worth....I've had a few smaller digital cameras, and now I have a Canon 10D Digital SLR 6 MPixel (which I love).

The one thing I would say if you're thinking about a smaller point and shoot camera...If you're going to be taking a few photos indoors with a flash; many of the point and shoot cameras have a small flash that just didn't do the job for me (subject lit up within 3 feet and the rest of the photo dark). However, some of the smaller P&S cams do have a "Hot shoe" on top so you can add an external flash down the road. I always thought that was a great feature (like the Canon G3)...That way you can get the more powerful flash for indoors and still have a small "package" for outdoor use.

I bought the 10D just before our son was born and have never looked back. Between the body and lenses, it's a bit of an investment. But I sure have saved a lot on film and developing / prints for those impulsive shots. Over time that savings will definitely close the gap on the purchase price...

I think you'll love the freedom of a digital camera. Once you see the high resolution that today's models are capable of, it's hard to go back to a 35mm or APS film camera.

Randy