However I want to EMPHASIZE that I am no expert when it comes to cameras. What you find below is strictly personal opinion. Other people will have different opinions and you should definitely do a little bit more research and comparison on the specific camera that you are thinking about buying, but hopefully this will give you a place to start. The Amazon links are not the best price you can get for these cameras, this was just the easiest way for me to show the relative price differences in the camera. BTW if happen to buy through these links I get a small commission.
A few notes before we begin and questions you may have that I want to answer quickly here.
What is ISO?
ISO is your camera's sensitivity to light. The higher the ISO capability the better quality image you will be able to take without flash in low light. The newest models have ISO up to 3200 - 6400 (some are even higher!)
How important are megapixels?
Megapixels determine how big your image is and the quality of that image. Megapixels are important, but as I've done my research I have developed the opinion that 10 megapixels is just about all you need, more is better but 10 is good.
The point and shoots:
The Canon Powershot is my #1 recommendation if you are wanting to upgrade your camera to a more powerful point-and shoot.
The A series is a very affordable line of cameras (at or under $100) and the SD series is available with a few more megapixels and some cool features. The SD 3500 IS has 14.1 megapixels, ISO sensitivity of up to 1600 and has a continuous shooting speed of 0.7 - 2.7 frames per second.
the S80 has 14.1 megapixels and with ISO sensitivity up to 6400 (WOW!) and continuous shooting speed of 0.9 frames per second this is a great, fast little camera.
The advanced point-and-shoots:
Maybe you don't have money in your budget for an SLR at the moment - here are some good advanced- model point and shoot camera that have better lenses and more control though not as much control as you will get with an SLR.
SX130 - 12.1 megapixels
SX30 - 14.1 megapixels ISO 80-1600 8fps
10.1 megapixels ISO 125-3200 10fps
14 megapixels ISO 6400 8 fps
The "Starter" SLRs
To be honest I'm not a huge fan of "starter" SLRs - at least not for a serious photographer. I would only recommend this camera to someone who was looking to get higher quality photos of their kids and has no intention of learning how to really use their cameras or shoot in manual mode. Or for an older child/teen who is interested in photography. It is more difficult to adjust settings and overall has poorer image quality than other SLRs.
If you are a more serious photographer but just starting out in SLR photography and want to get a "starter" SLR camera you may want to consider buying a used camera body and highly recommend that you get a slightly older model as you will be saving a good chunk of cash - which is a good thing because you will more than likely we looking to upgrade your camera again within a few years. There are a few photography forums where you can purchase used camera gear with confidence. You can also buy used gear from Amazon.com, Ebay, KEH.com and other places. Be careful since this there are second-hand camera scams out there, but this is definitely a good way to go. The older the model the cheaper of a price you will be able to get.
I do not like that this camera has only one control dial and that many of the controls must be accessed through the menu. The Nikon D40 is an older model of the same basic camera. Something to look out for also with this series of cameras is that auto-focus will not work with any G series or D series Nikkor lens (i.e. just about all of the prime lenses).
D3000 vs D5000
The Nikon D3000 has 10.2 megapixels, ISO up to 3200, shoots at 3 frames per second
The Nikon D5000 has 12.3 megapixels, ISO up to 6400, shoots at 4 frames per second, shoots video
Canon EOS Rebel XS/XSi/XTi/T1i (500D)/ T2i (550D)
The Digital SLRs
In my opinion these are the only cameras you will need for a very long time (unless you begin to venture into professional photography) They are some really good, high quality cameras that should have you shooting happily for quite a while. The biggest difference between these DSLRs and the "strarter" DSLR is that they have dual control dials which make changing your settings that much easier, giving you more control and flexibility.
Update (12/2011) :
This is my new favorite camera to recommend: it's got the latest Nikon technology, making it nearly comparable to the D700 but for about a third of the price.
The D90 is a great camera - perfect for getting both the quick snapshot and the carefully constructed work of art.
Here are the details: 12.3 megapixels, ISO: 6400, 4.5 frames per second (fps) 11 auto focus points, also has video recording.
I have a D80 (older model of the same camera) and I love it! The only thing I don't like about it is that it doesn't shoot well in Auto (the hues are quite blue) and I have never been able to get really great shots of anything that is red (like res sugar or a tomato) - I always have to post-process the red to color correct. Here are the tech specs: 10.2 megapixels, ISO:1600 3 fps 11 auto focus points. It would be a good camera to get as well.
Canon EOS 60D
50D 15 megapixels ISO 12,800 sensor: 14.9 x 22.3
40D 10 megapixels ISO 3200, sensor: 14.8 x 22.2
The Advanced "Prosumer" Digital SLRs
An amazing camera won't automatically turn you into an amazing photographer, but when you have reached the point in your photography when you are seriously considering starting a business it is time to look at professional cameras. Your paying clients deserve stunning quality images - which you simply won't be able to provide without upgrading your gear. You don't have to go strait to the (insanely) expensive cameras to have a good photography business, most of the professional momtographers I know online use similar equipment.
When it comes to the prosumer level camera the most important thing to me is the sensor size. A lot of these cameras will have "full frame" sensors (which is 36 x 24mm) which provides a higher quality image.
Sensor is 36x23.9 / 12.1 megapixels / ISO 100-6400 (with a max ISO of 25,500) 5 fps, 51 auto-focus points
This is one of my top choices (I found it refurbished at KEH.com for $1999 and on Ebay for about $2000) this is the camera that Madeline Bea upgraded to and she blogged about it here. I already have a couple Nikon lenses and a few other Nikon accessories so this may be the camera I upgrade to - you'll just have to stay tuned to find out! ;)
Nikon D700 vs D300S:
The D700 has a larger sensor size/ The D300S sensor is 23.6 x 15.8
The D700 shoots at 5 frames per second / The D300 S shoots at 7 fps
The D700 has an ISO of 6400 / The D300S has an ISO of 3200
The D300S shoots video with sound
The D300S has an Estimated Selling Price of $1699.95
The D700 has an ESP of $2699.95
Canon EOS 5D MarkII
Update: this is no longer my dream camera. It's nice, for sure, but I think it's overpriced for the quality of the camera. If you are going with Canon the best one I know of as of 12/2011 is the 7D.
Here are the technical specifications for th 5D Mark II:
36x24 mm sensor, 21 megapixels, ISO 100-6400, 2.9 fps, 15 auto-focus points
This is the camera that Monica at Pixel Perfect uses.
Canon EOS 7D
Tech specs: 22.3 x 14.9 sensor, 18 megapixels, ISO 100-6400, 19 auto-focus points, continues shooting high 8fps/ low 3fps.
This is the camera that the lovely Mandy at a sorta fairytale uses.
7D vs 5D Mark II
5D more megapixels and larger sensor area / 7D faster continuous shooting capability
5D 15 auto-focus points/ 7D 19 auto-focus points
5D has an additional max ISO point.
Both shoot video with sound.
The 5D Mark II is priced at about $1,000 more than the 7D
These are the "time to get a second mortgage on our house" Digital SLRs - you might hear about them around the blogsphere so I thought I'd mention them here briefly:
27.9 x 18.6, 16 megapixels, 10 frames per second, ISO 12,800, Priced at about $5K.
When you are considering buying a lens I suggest getting a good, high quality name brand lens. There are other lenses out there that will work on your camera and they may be cheaper but the Nikkor and Canon lenses are really the best. Sigma is also a great brand.
When I upgrade my camera I'll be buying the 50mm f/1.8 and I can't wait to get it!! The 35mm is also a great, versatile lens. Then a zoom lens is great to have for those long-distance shots. I currently have a 55-200mm and it is good but I would really like to upgrade it to a 55-300mm lens to get that extra edge.
Update: If you'e updating your Nikon lens the G series is higher quality. The f/1.4G is the ideal workhorse lens.
Nikon 50mm f/1.8D AF Nikkor Lens for Nikon Digital SLR Cameras
Nikon 35mm f/1.8G AF-S DX Lens for Nikon Digital SLR Cameras
Canon EF 50mm f/1.8 II Camera Lens
Canon EF 35mm f/2 Wide Angle Lens for Canon SLR Cameras
Sigma 70-300mm f/4-5.6 DG Macro Telephoto Zoom Lens for Canon SLR Cameras
Canon EF 75-300mm f/4-5.6 III Telephoto Zoom Lens for Canon SLR Cameras
Canon EF-S 55-250mm f/4.0-5.6 IS Telephoto Zoom Lens for Canon Digital SLR Cameras
Tiffen 52mm UV Protection Filter - a UV filter is such a life-saver! I keep this on my lens to protect it at all times and replace it every year or two.
Digital Concepts 52mm +1 +2 +4 +10 Close-Up Macro Filter Set with Pouch For Specific Nikon Lenses: a macro filter is so much more affordable than a macro lens and is a great accessory to have, especially if you enjoy taking macro shots.
Nikon ML-L3 Wireless Remote Control - very handy, especially for self-portraits
1:1 Coffee Cup Mug for Canon Lens Ef 24-105mm F/4L IS USM 5D (Just a Coffee Cup, Not Camera Accessory) with steel liner - this is one of the awesomest photography gifts I have ever seen!
Vista Explorer 60" Lightweight Tripod with Tripod Bag this is a great tripod, this one is pretty much just like what I use and it is very versatile, easy to maneuver and adjust while super-sturdy.
Camera Review Sites
Nikon USA - this is a great place to compare new Nikon cameras side-by-side
Canon USA - a great place to compare Canon cameras side-by-side
Steves DigiCams - this is my favorite camera review site - it's very easy to navigate and has lots of information.
Imaging Resource/ Dave's Picks
Digital Photography Review
A list of photography dealer websites - including a list of those to avoid.
BorrowLenses.com- Photography camera bodies, lenses and accessories for rent by mail. Super affordable, wide variety, and mostly great reviews! I can't wait to try this. Read a review of the site from Geek.com here. Here's another review. And check out their rating on ResellerRatings.com
Okay - I hope that wasn't too overwhelming!! I'd love to hear your thoughts on this subject. I've started a discussion on my Blog Frog community - I hope you'll join in!
Are there any other accessories you just can't live without?