I've purchased three digital cameras since 2000, and want to share some of my experiences with you.  I hope that this guide will help you, whether you are purchasing a point & shoot or a DSLR.

My first purchase, at the turn of the century, was a 1.3 Megapixel point and shoot with very few options as far as manual controls went.  All I really wanted was something to take digital snapshots for use on the web or for 4x6 prints for the family photo album.  I used this camera for a good while and was perfectly content with it...until I wanted more control over my photos.

My second purchase, about three years later, was another point and shoot, but "SLR" sized, with 3.something megapixels, but went to 6.something "effective megapixels" or some such.  I didn't know what it meant, at the time, but I was really starting to get back into photography, and I was doing macros of flowers and portraits for print up to 8x10.  This camera was a great camera for the money, but I should have done more research. About a month after this purchase, my sister bought another brand of camera, for not a whole lot more money, and had a WHOLE lot more features on it.  It had a bulb setting and a remote that kept the shutter open for long periods of time, and mine didn't upgrade to those kinds of things. She got a whole lot more bang for her buck, but I really can't complain, given the image quality of the larger pictures. It even gave me good 16x20 prints, but wouldn't go much more than that.

My most recent purchase was a DSLR, 10.1 megapixels and options up the wazoo.  This camera should hold me until I open  portrait studio or decide to shoot weddings, which should be sometime in the VERY distant future. :)  I researched the snot out of this purchase because I not only knew what my budget was, but I knew EXACTLY what features I wanted.

Now, between all of the above major purchases for myself, I also purchased a couple of low-end point and shoot digitals for my daughter, who is a budding shutterbug in her own right.  The first one I purchased was at a retail store for $19.99.  The second one was purchased here for about five dollars more, but had more features.  Let me tell you; you get what you pay for!!!!!  Earler this year, my boss asked me to make a recommendation for an upgraded digital camera for the office.  Camera shopping and getting paid for it...wow...didn't get much better than that!

My advice to anyone looking for a digital camera is this:

1. Know what you want the camera for; are you wanting to simply take snapshots of the family and the new puppy?  Are you wanting to shoot professional grade portraits?  Do you want to take some landscape photos that you might want a framed print of, and if so, how large a print do you want to hang on your wall?  Make a list of the subjects you are going to shoot with your camera.  Do you want to take pictures of items for sale on ebay or for putting your face up on your web page?  If so, you can go with a lower-megapixel camera.  You want web optimization, and don't want to choke the server with a huge jpg file.  If you want a camera that will take a good portrait or a landscape at no more than 8x10 print size, then go for your mid-range camera; 4-6 megapixels should work for you.  If you know you'll be shooting weddings, poster sized prints, etc. then go for as many megapixels as your wallet will let you. The more the better! You can always reduce the size of the images you want to put on the Internet, but you have the flexibility to print those keepers to hang on your wall.
   
2. Don't let the size of the camera body fool you.  While I was walking around thinking I was all that and a bag of chips with my "professional sized" 3.something megapixel camera, my best friend was pointing and shooting with her compact-fit-in-her-pocket-go-anywhere camera...yet her pictures were kicking butt!  Why?  Because she was shooting 6-point-something megapixel images with full manual control.  That'll teach me to be a camera body snob!  And while I no longer look down my nose at compact cameras, I do know that I feel more comfortable with a larger camera...just personal preference on my part.
   
3. If your budget allows, purchase a camera a little bit more than what you think you will need, in case you get photo-fever and want to expand your knowledge or want a little more manual control of your images. Not only that, but technology evolves so quickly these days you don't want to purchase something that will be obsolete next month.
   
4. RESEARCH, RESEARCH, RESEARCH!!!!  I cannot say this enough!  There are many places online and on Ebay that will give you good advice on purchasing a digital cameral.  I won't post the link, as it is off of Ebay, but I used "My Product Advisor" for purchase on three cameras...two I own and the one I purchased for the office.  This site will ask you a myriad of questions based on your preferences, then they will give you a bunch of choices that meet your preferred criteria. Or Google "purchasing a digital camera" - this should bring up a ton of helpful links. When you decide on one, then you come to www.ebay.com and run a search for that model.  ;-) (Yes, shameless plug for Ebay here.)
   
5. If you are purchasing online and are not able to take your exact camera for a test drive, do some test driving on your own at local retailers that sell the same brand/model.  If you purchase on Ebay, get to know your seller.  There are many digital camera sellers that also have retail stores with 1-800 numbers to call if you have questions, and I would highly recommend that you call and ask as many questions as you can! Most retailers/sellers are happy to answer any and all of your questions.  If they aren't, ESPECIALLY if you're purchasing a high dollar camera, you may do well to take your business elsewhere.
   
6. Beware of pushy sales people that will try to sell you a package deal that includes a boatload of stuff you don't need.  Yes, by all means, if they are gonna throw in a 2 gig memory card for a few dollars more, then go for it, but if you
   REALLY don't need that set of filters, the battery charger, or the rechargeable double-a batteries, decline.  You may find that you can get a better deal on those items the vendor is trying to hard-sell you on Ebay.
   
7. Get a case.  It doesn't matter what kind of camera you purchase; protect your investment!!!!  My camera outfit came with a hard-case with foam interior that appears to be bullet proof.  Now, if I had it to do over again, I would have gone for a soft case, or even a backpack-type case to keep my lenses and camera body in.  That hard case is a booger-bear when you're trying to climb up or down to get that perfect shot.  Think about how and where you'll be using your camera and get a case that will help you get there without banging the mess out of your investment. :)
   

I hope that this guide was helpful to you, and that you get the camera that you want/dream of!