Aren’t we mixing things? What is “best” for one purpose or person, may not be for another. SLR’s are in most instances better performers than compact cameras, be it in the film world, or in the digital world. However, someone shooting large format could very well state that “SLR’s are toys and not the real thing”.
Camera makers are spewing new models basically every day; if they do this, is because they make money out of it. Therefore, someone out there must be buying them, right? There is this perception that to be a photographer, you have to take good photographs. But perhaps for, I don’t know, 95% of users, it is quite alright just to snap away, with the goal to have a nice, crisp, and colourful print, or e-mail friends while on trips. For this, the powershots, coolpixes, you name them, are actually quite suitable. All the time, they are having fun.
For the so-called serious photographer, these compacts can be useful tools too, and sometimes great photos are made with them. Even with all the limitations mentioned: lack of proper optical viewfinder, etc. My favourite complaint is shutter lag, apparently it prevents 100% of people to take a photo of the decisive instant. But everyday we see wonderful pictures coming out of these crippled cameras, so what gives? Perhaps it is the photographer that makes a difference?
I too, would love to have something like a digital Leica CM, or something like the Sony R1 (but a lot more compact, that is the point). Big sensor, good high-ISO performance, fast and sharp lens, aperture priority, and why not image stabilisation? Indeed there is market for such a tool. In the meantime, I make do with what is available, learn to overcome the shortcomings, make some interesting photos here and there, and continue to have fun.