Well, the photo world is shaking up again. The new cameras are just so amazingly good and they are improving not so much in resolution. The megapixel wars are ending, but in providing great images at high ISOs. This means two things: a) available light shooting is much more natural and easier for everyone and b) you can use cheaper lenses to get similar effects. For instance, just being able to shoot high quality ISO 800 vs ISO 400 means that your consumer lenses which goes to F/4 for instance, is now equivalent in shutter speed to a professional lense at F/2.8. It's a whole stop of performance.
So in a nutshell, here are the recommendations (which reflect how amazingly well Nikon has been doing vs. Canon):
# For a newcomer, get the Nikon D60 with Nikkor 18-200 or the Canon Digital Rebel XSi (aka 450D) with Sigma 18-200
# For a prosumer, get the Nikon D300
# For a professional-wanna-be, get the Nikon D3
h3. Entry level
It is hard to believe that the entry level cameras at $800 or so are so good now. At this rung, there are two cameras in a dead heat right now. With maybe a slight nod to Nikon. You can think of these as great cameras up to about ISO800.
The "Canon XSi (aka 450D)":http://dcviews.com/_canon/450d.htm is the latest Canon and probably the best in specs right now at the entry level but for noobies lacks a great lense. The Sigma 18-200 is just not as good as the Nikon 18-200 IMHO although Popphoto.com tests the Sigma as better. Main issue for me is that with sunsets, it really does a terrible job of blowing out the contrasts (now this could also be my old XT, so I need to really have a new XSi to know :-). I have the 8Mpixel XT and it has been a great camera.
The new 450D is 12 megapixels, so probably not a bad time to upgrade. You should get this if you've got a boatload of lenses like me, you are a little stuck. The 12Mp is nice and it has LiveView but the main thing is that it doesn't have incredible low noise/high speed performance of the D300. It has an integrated cleaning system and a big 3" LCD which is really helpful compared with the 1.5" on my XT. It also produces 14-bit color (rather than 12-bit) in RAW so is going to be nicer. It also switches to SDHC cards, so should be faster longer term. It lists for $900 body only so ain't exactly cheap.
"RAW":http://www.photoreview.com.au/Canon/reviews/digitalslr/canon-eos-450d.aspx delivered higher resolution at 2500 lwph vs. 2000 in JPEG. The camera takes low noise shots, high dynamic range shots up to ISO800 (a step up from my XT which is usable to about ISO 400).
With JPEGs, it does saturate the reds quite a bit, but this isn't a problem with RAW. This could be because the "normal" picture style is oversaturate for amateurs. Seems like faithful is a better setting. "Cameralabs":http://www.cameralabs.com/reviews/Canon_EOS_450D_Digital_Rebel_XSi/outdoor_results.shtml points out Canon doesn't do much sharpening in the camera, so you add it later with Picture Styles or in your computer. "DPReview":http://www.dpreview.com/reviews/canoneos450d/page21.asp shows that you get 8.7EVs in dynamic range all the way up to ISO 400 and even at ISO 1600, the dynamic range reduction is only to 8.3EV. They also note that if you use RAW, you can overexpose your shots by 1EV and then dial it back digitally and in essence get an additional exposure value (stop) which is amazing. Most reports show the Canon is noiser at high ISO than the Nikon D60, although "dpreviews.com":http://www.dpreview.com/reviews/CanonEOS450D/page19.asp says the opposite.
The Nikon D60 is the perfect entry level camera that replaces the very successful D40x. It has 10 megapixels, but more importantly, you can mate it to the incredible 18-200 Nikkor lense. That's the real reason to recommend it. It's the lense.
The main differences with the D40x are a dust reduction system. It has a 2.5" display which is nice. As a small aside "Dpreview.com":http://www.dpreview.com/reviews/NikonD60/page18.asp notes that at ISO800. At high speed, you lose one stop of shadow everytime you move an ISO (ISO 400 is 8.9EV of dynamic range, 800 is 8.0, 1600 is 7.2 and is very close to the D400). "Dpreview":http://www.dpreview.com/reviews/nikond60/page20.asp also notes D-Lighting is useful, it increases the definition in the shadows when you have a high-contrast shot at ISO 100 and 200. Net, net, noise is lower, but ISO 800 is about where you can push this camera without losing too much.
h3. You are a prosumer
The "Nikon D300":http://www.dpreview.com/reviews/nikond300/ is the right camera for prosumers (like me!) who want to shoot in available light or use cheap lense instead of buying expensive F2.8. It is 12 megapixels and costs a lot. But it has a 300Kpixel 3" screen, is super fast and 51 point autofocus. Drool, drool. Of course, it is huge in size, so you are committed when you have one.
It can take great pictures at ISO1600 so it is way more flexible than the entry level D60. It is huge and bulky though so more for specialists who take sports shots or want to shoot in low light. "DPReview":http://www.dpreview.com/reviews/nikond300/page18.asp point out there is little or no noise at ISO 1600 which is kind of amazing. And like all prosumer cameras it delivers about 9EVs up to ISO 800 and then 8.4EV at ISO 1600 according to "DPREview":http://www.dpreview.com/reviews/nikond300/page20.asp It is expensive at $1800 list, but worth it if you want it.
_For those of us with Canon lenses, what we need is an update to the EOS-40D to get us to 12 megapixels and hopefully better noise performance._
h3. If you are a professional wannabe
For those of you with $5000 to spend on a camera (is there anyone like this?), the ultimate right now has to be the "Nikon D3":http://dcviews.com/_nikon/d3.htm. It is Nikon first full frame camera and is 12 megapixels. What is amazing is that it is low noise and has great "dynamic range":http://www.dpreview.com/reviews/NikonD3/page20.asp of 8EV up to ISO 6400! In general you can shoot at ISO3200 all day long without many compromises. That's pretty remarkable. As a small aside, this is full frame, so there will be vignetting (light fall off on the edges), so you need to use something like DxO to correct for it. It also shoots 9 fps so this is really the sport photographers' dream camera.
_The Canon 5D is now three years old and is also a 12 megapixel full frame. It is long in the tooth and an update to this would really put Canon back in the running. It is a great camera with great resolution, but doesn't have the low light performance of the Nikon. OTOH, it is $2500 so half the price. Or for $7,000 go crazy and get a 21 megapixel sensor, but non of the low light performance of the D3 with the "Canon 1Ds Mark III":http://www.the-digital-picture.com/Reviews/Canon-EOS-1Ds-Mark-III-Digital-Camera-Review.aspx_
h3. You can teleport two years into the future: "Sony A700":
Looking forward, Sony is really coming on strong. Their new A700 with 14megapixels (although you can't really see this difference) and builtin image stabilization is an amazing camera, but it doesn't have the huge number of lenses that Canon and Nikon have. I'd say in 1-2 years, it is going to be the camera to beat though because it has the manufacturing scale. It makes imagers for Nikon too and with new optics, you don't need lots of lenses. Most folks will have a 12-25 wide zoom, 18-200 super zoom and that is all most folks will need.