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I agree with Roberto go with the D80 if you can. When I was shopping I wanted to buy the D80 but it was out of my price range so I settled in on the Canon S5 IS ===> http://www.nextag.com/Canon-PowerSho...59/prices-html
I have both: a very old Canon Power shot S100 2mg pixel that still takes great shots (even thought I've only used it a couple times since I got my dslr). Today's model, the SD1000 or something like that, is much nicer and waaaay cheaper - mine was $500.
My DSLR is a Nikon D50 6.1 mp. It takes shots that blow away the old Canon, but then again, the sensor, lenses, etc are much better than those in a compact camera. You can get a D40 for around $400. Both are basic DSLR's, but take amazing pictures.
My pick? Let's put it this way, if pictures are to be taken, it's the Nikon. My wife and kids just share lugging chores. But even if I were the only one, DSLR without question. The only drawback is a little extra weight and the cost of all the lenses, flashes, and other accessories is much, much higher. However they can be added as time goes by.
One thought - try ebay. you can get nearly new excellent dslr's with extras even for $300 or so. I used to but and sel cameras on there and had only one or two bad deals out of hundreds. I even bought all my extra lenses for the D50 off ebay. They were just as good as new and cost half the price.
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