David asked me, OK, zooming back (no pun intended), if you want a smaller camera, what are the realy choices:
# Canon or Panasonic point and shoot. If you just want a point and shoot like the Instamatic of old, then pretty much anything in the el cheapo 8MP range is going to work. Last year's SD850 is a good choice which is 8MP. The picture quality is decent. The SD790 is a 10MP camera so it is going to have images twice as large. But it does have all the features like stabilization. It would be a slam dunk except at the really low end 28mm, it has distortion. Similarly the Panasonic FX35 would be a slam dunk but it has noise in the dark spots.
# Got retro. Go Fuji. The F30 is essentially an ebay item now and doesn't have a modern screen and so forth, so it is the retro choice for the afictionado. I have an F10 and an F11 and they remind me of the Yashica T4. The T4 is a film camera long out of production, but it had an amazing fast lense and was a fixed lense, no zoom. The ugly truth is that you can't have a tiny package, gigantic zoom and lots of megapixels something has got to break.
# Non-Altoid box sized. But still small. LX3. If you are willing to go just a little bit above point and shoot and slight larger, then that is where all the action is. These cameras are much smaller than an SLR, but have much, much, much better image quality that a point and shoot. I only got the SD790 because most folks really don't care about image quality, they just want a snap. But if you care a little, then there are three amazing choices that are coming in October that are just maybe more like the size of the old 35mm point and shoots rather than an Altoid box size.
It is these so called "super compacts" that are generating the most interest. They break the physical constraing of small size, but still use the tiny sensor. So maybe with a better lense, you can coax more performance out of these tiny 0.5 inch sensors:
* Panasonic Lumix DSC-LX3. Reviews are just coming. It is $500, but has a very, very fast lense F2.0/2.8 so could be a really great available light camera. The point and shoots really suck in the most common case, you are in a restaurant and you use a flash. They you get that bright forehead, red eye, deer-in-the-headlights shot. All these look much better without a flash (like the F30).
* Canon G10. Photokina is coming and Canon is updating their so called "super compact" which might be very good.
* Panasonic micro-4/3rd. This is between a big SLR and a compact. It uses a much larger sensor (the beginning and middle and end of the quality bar is really how big a sensor you put in. A dSLR essentially has a single chip with is 1 inch x 1.5 inches. That is kind of a big piece of silicon and requires a big piece of glass in the lense, but that whole thing might have 12MP. In contrast, your basic point and shoot crams 12MP into something with is 1/2" x 3/8", so no kidding, you get a tiny camera, but that is an aweful lot of density, so no surpirse. Then instead of glass, you have this tiny single lense. No surprise it looks like a picture from a Cracker Jack box camera.
So my real recommendations are:
* If you want a camera for just point and shoot, then really look at the super compacts because one great picture is worth 50 crappy ones. LX3 all the way!
* If you really care, get a Lowe Backpack and carry around a full dSLR with a superzoom lense. Ironically the price is about the same as these cameras and picture quality is amazing because you are carry around so much more sensor.