The DSLR still provides the most options and the best image quality for getting the perfect shot. The larger image sensor in a DSLR alone means superior picture quality and better sensitivity in low lighting, resulting in payoffs in terms of opportunity to get creative with aperture and exposure.
The more expensive full frame DSLRs such as the Nikon D3X or Canon EOS 5D Mark II have the biggest image sensors of the types discussed here, though entry level cameras such as the Sony A230 still boast larger sensors than power zooms or most high quality compacts.
Of course sensor size is only part of the story. DSLR owners have the best choice of high quality lenses, the ability to change lenses, more advanced control of exposure settings, none of the shutter delays that plague cheaper formats... the list goes on.
For anyone shooting sport or scenes with minimal lighting the DSLR really comes into its own, but the range of lenses and exposure settings also means advantages in all shooting conditions.
There are a few trends to note for prospective DSLR owners. One is the emergence of the live view function, which allows you to see the scene you're shooting on the camera's LCD screen, instead of looking through the small viewfinder.
DSLR live view can be less than ideal, with autofocus limitations. Some DSLR manufacturers have introduced new live view systems to get around these problems, such as Sony's Quick AF Live View on the A330 and A380.
As well as more "compact-like" features like live view, the other trend is the arrival of the mini-DSLR in the form of cameras like the Olympus E-620.
These are smaller and lighter than full size DSLRs (especially compared to cameras like the Canon EOS 5D Mark II). Does it make a huge difference? We're not so sure - the more compact size is handy, but these still aren't the kind of devices you can stick in your pocket, nor would you want to.
Also in this series, Stepping up to a DSLR camera
Part 4: Digital camera checklist, know your gear
Part 3: Should you consider a power zoom instead?
Part 2: Should you consider Micro Four Thirds instead?
Part 1: The megapixel myth
Also see our Group Test of 11 Digital SLR Cameras