Gary, I agree that there are now "crossover" digital cameras that approach DSLR quality, at lighter weight, lower cost and with a reasonable zoom range. My personal gripe with even those is that there are precious few of them that go wider than 35mm (equivalent on 35mm full-frame film since that's how most of us still think) at the wide end. There are quite a few with 7:1 or 10:1 zoom ranges but you have to search a long time to find one that is even 28mm on the wide end, much less 24mm. I am thoroughly addicted to the 12~24mm (18~36 equivalent) wide zoom for my Nikon DSLR. Whether shooting mountains or interiors, having something that's down in the 20mm range appeals to my aesthetic.
Then there are the "specialty" items, like my 10.5mm fisheye. If I weren't into shooting spherical panoramas, like the one from the
Tooth of Time out at Philmont, it wouldn't be as interesting, but as a purpose-bought lens, it is amazing. (To see what that pan really looks like, if you have the patience to load up a 3-megabyte Quicktime VR file, check out the
larger version of that pan.)
I had the 24mm add-on wide angle for my old 990 and 4500 Nikon digitals, but this was a compromise in quality as is any add-on (over the prime) lens. Same for the 8-mm add-on fisheye. It got me hooked on spherical pans but the quality of my
Mt. Whitney pan, shot with the 990 and add-on fisheye, is nowhere near what the D200 and 10.5 can do.
As far as how large a print you can get from a given camera (digital or film), that's a matter of taste as well as technical limitations. My 990 and 4500 (3 megapix and 4.5 megapix, respectively) were only just barely capable of producing acceptable 8x10 prints to my standards, and those only if you used every last pixel in the image. Now, realize I'm used to shooting 35mm or 2-1/4x2-3/4 film, low-speed at that (Kodachrome 64 in 35mm and Ilford FP4 B&W in the 2-1/4) so I have rather high standards. I make no apologies for that...
I stand by the general comment that the bigger the image, the better...note that I did not say the more pixels, the better. One of the reasons that my 2-1/4 Mamiya will always produce sharper images than my 35mm Nikon (or my 10-megapix Nikon DSLR) is that its base image is 4x the area of the 35mm and 8x the area of the DSLR. Integrated circuit technology can pack a ton of pixels into a very small space but if the glass forming the image is only capable of resolving 100 lines/mm, the fractional-inch imager in the pocket cameras will never be able to match the image quality of a camera with a large imager, whether that is a crossover digital, a half-frame DSLR like my D200 or a full-frame DSLR like the Canon D5 or Nikon D3X. Simple optical limits, nothing more.
We probably need to subdivide the digital camera spectrum a bit more finely, much as I would subdivide the world of film cameras. There is definitely room for more than my two rough divisions.