This question, on average, gets posted about 50 times a day on one photo forum or another.

The answer is simple but rarely given:

Answer (part 1):

All digital point & shoot AKA compacts, including bridge cameras, are crap.

There are no real exceptions. On a bright day with the sun behind your back and with a lot of luck regarding exposure you can get an image that isn't half bad compared to what a dSLR would give you. The digital "film" (the sensor) inside a point & shoot is smaller than the fingernail on your baby finger (Fig. 1).

This drastically curtails the kinds of lighting in which you can get a good image (Fig. 2). To compose or frame the shot you have the coarse image on the LCD monitor, which is usually washed out by glare in any kind of interesting light (Fig. 3), or in ever-fewer cases you may find a 1/2" tunnel optical finder with about 80% coverage – marginally useful when backlighting washes out the LCD.

Because the sensor is so tiny it has very little latitude for exposure (usually called dynamic range or DR, see Fig. 4), making precise exposure all the more critical. Yet it is precisely these little cameras that skimp on usable exposure controls for fear that Mom & Pop buyers will pass on anything that resembles photo-technical. Instead, they abound with a wealth of touchy-feely options like sunset, party, museum, fireworks, face detection, and now even smile detection. None of which can compensate for the inherent inability of the camera to determine the correct exposure in high contrast lighting.

Another critical aspect of picture taking is focus. To do anything useful at all with a camera you have to get the composition correct, the exposure correct, and the focus correct. With the typical small camera the only thing you can focus and meter on is whatever is in the centre of the frame. If you want Daughter Daniella in focus on the left of the frame and her brand new pony in focus on the right of the frame, you've got problems.

Bridge cameras look more serious but have the same baby-fingernail sensors inside, whether or not they have anything resembling usable exposure and focus controls.

The only thing that even hints of an exception to the small = crap rule are at the highest end of the price scale, such as the Canon G9, Panasonic LX2, and Ricoh GX100 among compacts, and the Panasonic FZ50 among bridge cameras. These have the same baby-fingernail sensors inside, but at least offer a RAW file format plus competent exposure and focus control ... at the same price as a starter dSLR.

Given all this doom and gloom, you'd probably expect me to answer the question "small camera or dSLR?" with "of course, dSLR". Nope. All the problems I've pointed out affect image quality. For the past hundred years millions of people have been bouncing around the planet with small cameras taking snapshots of everything from birthday cakes to the Eiffel Tower. These pictures formerly got printed as tiny little 4x6 inch miniatures and now get e-mailed at 400x600 pixel e-mail attachments. In theory they are saved as precious heirlooms ... rarely in photo albums, more often in shoe boxes under the bed, more recently on a CD with a five year life span at the bottom of a drawer. Image quality is almost completely irrelevant. If you can recognize the people and major objects in the shot, that's all that matters.

Be honest: if the sky is white instead of blue from over-exposure, if the horizon has a slight tilt and Uncle Osbert is slightly out of focus, if Cousin Clara's hat is hot pink instead of fuchsia – does it really matter? If you want that cute little credit-card-sized point & shoot, buy it! It can take over-exposed out-of-focus shots as well as any other camera. If you want that serious-looking bridge camera with the 12x zoom, 45 buttons, and 300 menu items, go for it! The picture of Grandpa Gord looking mildly bewildered on Brother Bob's motor boat will be just as usable cropped or scaled down to e-mail size as it would if taken with a $10,000 pro camera.

These shots don't need to be masterpieces and you don't need to study photography for five years to take them. You're allowed to fool around and to have fun, and for that noble goal a dSLR is simply going to be as counterproductive as a hajib on the beach.

Answer (part 2):

If you need a dSLR, you'll know it.

Otherwise, simply buy whatever camera makes you happy and have fun.

Digging deeper

Here's some background reading material:

• Compact vs. dSLR: resolution comparison
• The Compact Camera Quandary: small sensor limitations
• The Case of the Mistaken Multi-Meter: evaluative metering problems (all cameras)