If you are very serious about photography, you'll be interested primarily in SLR cameras for their superior speed, image quality and lens selection. But a lot of people, including some serious photographers, find that an SLR is too big, heavy and obvious for many photographic situations. Non-SLR digicams are for that situation. The good news and the bad news is that there is a vast array of alternatives. I think it is mostly good news, and intend to comment here on some of the standout designs available right now. These products illustrate two core principle of design, both of which consumers tend to hate:
1. Technology has limits and as a result all product designs represent a selection from among possible tradeoffs
2. The products that work the best are those that carefully choose their tradeoffs around a well-defined usage scenario or scenarios
To start, I'd like to assert that the Canon Powershot SD1100 IS is the reference digicam. I get to assert this not just because I am the Gadgetman, but because a reference should be a very good product that meets the needs of a lot of users and is tough to beat. After throwing down the gauntlet a la SD1100 IS, I will suggest several cameras that I think are better (for certain users, per principle #2).
But first, back to the SD1100 IS. Why is this such a good camera? Well, first off, it is pretty affordable, at around $175. You can go lower (and we will), but $175 is pretty close to the bottom end of digicam prices.
Second, the SD1100 IS is small. If you think about it, the likely reference camera for a lot of people is the camera in their phone. If they're going to carry another camera, it better at least be pocketable. The SD1100 IS is, at 3.5" x 2.3" x 0.9". That's almost as small as you'll find, and will easily fit in pocket or purse.
Third, it is a Canon. I've talked to a lot of buyers of cameras, and many just don't want to stray too far from the major brands. Canon is the heavy hitter these days in SLRs, so no one should be embarrased with a Canon on their wrist (or so the thinking goes). From experience that isn't bad logic, at least with Canon. Canon is also a leader in digicams, has lots of R&D, and on average makes very competitive cameras.
Fourth, it has image stabilization (IS). No matter who you are, your hands shake, and you need IS to reduce the impact, especially when shooting indoors where shutter speeds are longer and the impact of shaky hands is higher.
Fifth, it has a reasonable optical zoom range. If you're going beyond your cameraphone, you want a decent zoom. The 38-114mm zoom in the SD1100 IS covers mild wide angle to mild telephoto and will yield much better compositions on average than a fixed focal length camera phone. Since many photos most people take will be of people, this range is close to ideal.
Sixth, the SD1100 IS has a rechargeable battery. Battery life from throw-away AA or AAA batteries is typically much shorter, and the cost of buying new batteries can be high over time. So, a rechargeable battery is important and the SD1100 IS has it.
In a nutshell, the SD1100 IS has all the necessary features for a basic digicam. It also doesn't have any big drawback that I can see. It has a decent movie mode, uses the popular SD card format, has 8MP resolution, offers an optical viewfinder, has a nice 2.5" LCD, has a reasonable user interface. Heck, you even get to pick the color you like.
If you spend much less, you'll probably have to drop one of these necessary items. If you spend more, you should get something worth having. Come back for part 2, as I begin to expore cameras that best the SD1100 IS in meaningful ways.