Digital Photography Review is a solid source -- if you are in the market some something that is small yet not terribly compromised ... read on.
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Since the introduction of the affordable digital SLR a few years back industry observers have been predicting the demise of what used to be called the 'prosumer camera'; the highly specified compact with features aimed at the more serious photographer. A few years ago you could easily pay $700 for a top end compact; today that will buy you a decent SLR with a kit zoom, and it became obvious that the serious compact sector had to adapt or die - fortunately the manufacturers chose the former option.
Thanks to to falling prices and a significant diversification (giving us the option of models which are very compact, or have more exotic zooms, or SLR-like controls) the enthusiast compact market is in surprisingly rude health. These cameras are designed to appeal to the SLR user wanting something more portable for those days they don't want to lug their main camera around, or for anyone who simply can't justify the expense of an SLR kit but can't accept the compromises demanded by a standard point and shoot compact.
The biggest challenge faced by the manufacturers of this kind of product is that, whilst adding a few more controls or a more serious body - or even a bigger zoom - isn't too difficult, there's only so much they can do to improve image quality over models considerably further down the line, some of which will have very similar electronics (including the sensor) inside. We're all still waiting for larger sensors in compacts (Sigma's DP1 being the first, and only attempt so far) - until they arrive, if ever, the cameras in this group are the nearest you're going to get to a genuinely compact SLR alternative.