It's the question every photographer (even us lowly amateurs) gets asked a million times: what digital camera should I buy? (it's always digital, nowadays)
This is impossible to answer. It's like asking 'what car should I buy' or 'what wrench should I buy' or 'what pet should I buy' or 'what shirt should I buy'. How would I know? It depends on what you want it for! A camera is a tool - it takes pictures. Different cameras are better for different things. As the saying goes, use the right tool for the right job.
"But," they persist, "I have $1000 burning a hole in my pocket! It's getting really hot! Should I buy a high end 8MP point & shoot digicam, or a low end 6MP digital SLR?"
Well again, it depends on what you want to do with it. The 8MP digicams have a threaded mount in front of the lens, so you can add lens attachments. That's not quite the same as an SLR, where you actually take the lens off and put a different one on, but it still gives you a broad range of choices. So what to choose? I could point you to any of the the mind-numbingly boring array of extremely similar digital camera review sites, but they all suffer the same problem. They go on and on and on about technical specifications, and tell you nothing about actually using the camera! If you were to read these sites, you could easily be misled into buying a lousy camera, because technically it has better resolution or something, when in reality it's so slow and limited that you can't actually use the camera for anything beyond making test shots of test posters in controlled lighting.
One gets the feeling that they aren't written by photographers at all.
So, based on my own (admittedly limited) experience, I've put together my own (short) guide to answer this question. Personally, I'd still go with an SLR for several reasons.
1. SLR lenses are mature and have a considerable aftermarket. For example, Nikon SLR (and now DSLR) cameras have used the same lens mount for decades, so good used lenses can be found pretty easily. The newer digicams have only been out for a few years and you'll probably have to buy everything new, which is expensive. Also, there's no guarantee you'll be able to use those lenses on any other camera. Advantage: SLR.
2. CCD/CMOS size. SLR sensors are much bigger than the non-SLR digicams, which leads to much cleaner images and faster ISO speeds (for technical reasons I won't get in to here). Digicams are much noisier, and the noise is uglier too. SLR noise is very similar to film grain. Advantage: SLR.
3. Speed. DSLRs are getting incredibly fast, to the point where my D70 has zero perceptible lag or delay at all. It's faster than some film cameras I have used. Digicams are slow and frustrating to use. Advantage: SLR.
4. Resolution. 8MP is better than 6MP, but not much. For almost any practical purpose, there's no difference between the two (aside from smaller file sizes with 6MP). Unless you're going to regularily print extremely large images there's no need for more than about 5-6 MP. Advantage: neither.
5. UI. DSLRs are based off of film SLR design, where all the controls relevant to active shooting are at your fingertips. There's rarely a need to go into a menu between shots. Most digicams use the menus as the primary user interface, making them slow and frustrating. Advantage: SLR.
6. Batteries. DSLRs have big beefy batteries that don't need to power much (shutter, autofocus, etc). Digicams have smaller batteries that must power the zoom, LCD viewfinder, etc. DSLR batteries will last days. Digicam batteries will last a few hours, if you're lucky. Advantage: SLR.
7. Flexibility. DSLRs can handle a wide range of situations with minimal fuss. Digicams are more limited. Advantage: SLR.
8. Sensor dust. Taking the lens off of a DSLR can allow dust inside the camera body. This dust can get on the sensor and show up in pictures as dark spots. You'll be withour your camera for weeks if you send it in to get cleaned and you run the risk of damaging the sensor if you do it yourself. Digicams have sealed bodies so dust can't get in. Advantage: digicam.
9. Camera size. DSLRs are kind of big, making them more difficult to carry or conceal. Digicams are generally smaller and many can fit in a pocket, making them more convenient to keep handy. Advantage: digicam.
10. Flash. Adding an external flash gives you much more control over your images and makes some images possible that weren't possible before. DSLRs use standard flash mounts and there are usually a large number of flashes you can add to them. Many digicams won't let you use an external flash at all, or if they do it's some special flash made for that camera (like the lens attachments). Advantage: SLR.
11. Movies. As far as I know, no DSLR will take movies, while almost all digicams will. Advantage: digicam.
12. Flexible viewfinders. DSLRs use the viewfinder on the back of the camera. Digicams often have a flexible body or the LCD screen can twist and swing out, allowing you to take waist-level shots, shots over your head, etc. Right angle attachments for DSLR viewfinders can be pricey and aren't as big. Advantage: digicam.
OK, that's all I can think of off the top of my head. Of all the things I've listed, only the last one gives me pause about DSLRs. But then, I've got a Nikon Coolpix with a twistable body too, so I can still take these kinds of shots if I really want to. I don't really care about movies, so that's not an issue for me, but some might like to have that capability.
"But what should I buy?" you're still asking. Each type of camera has some advantages, but I think for the money an SLR is a much, much better deal, and a better investment as you can use the same lenses, flash, filters etc. on other cameras. If you want a small digicam to carry around in your pocket, get a cheap one. As for which DSLR to get, stick with Canon if you've already got a Canon film SLR system, stick with Nikon if you've already got a Nikon system, or just pick whichever one feels better in your hands if you have neither. You won't go wrong with either one.
Now quit asking me about your camera!