Many new compact cameras have more megapixels than some older DSLRs, and many functions and features (including full manual control, hystogram, RAW file format etc). And still they are less expensive than older DSLRs. Why? Because the interchangeable lenses? Complicated.
It is partly due to the hardware for interchangeable lenses.
The optics of the lenses are also better. DSLR usually have high grade glass.
It is not just about mega pixels though. There is a color quality component to be considered. Color saturation is usually better on DSLR.
Another advantage the DSLR has is the power and speed of the chips that control the camera. Some have internal memory buffers that let you take several shots in 1 second.
A DSLR will usually have much more light sensitivity and be able to take a faster picture. This also means not having to use the flash so much.
Maybe best, is to go to a camera store and try them in a side by side comparison.
The disadvantage of a DSLR is bulkiness.
I have a DSLR, but I also have a point and shoot compact for times a big camera can't be carried.
Happy shopping There is a vast difference between SLR cameras and compact cameras, the main being the lens. SLR cameras have interchangeable lenses and hence they offer you a lot of flexibility. The flexibility is multiplied manifold with the ability to add different kinds of lenses and filters. A lot other features like ability to connnect external flashes, manual controls, very long shutter speeds etc. are also advantageous.
Compact cameras have their own advantages. Besides being cheaper, they are small and so you can put them in your pocket and take them to every little occasion. That means you take a lot more photos which is a good thing. Second is that a lot of them offer different shooting modes to mimic an SLR. For a layman, those should be enough to get good photos in various lighting and motion conditions.
So, they both stand their ground. For a serious photo enthusiast who wants to experiement to hell's end with photography, an SLR is the only way to go. For an amateur who only takes photos at family and friends gatherings or on short outdoor trips, a compact camera would be good enough. And you dont have to buy additional lenses for a compact camera and they are a lot cheaper. Anothet thing that DSLRs have ver point and shoots are the sensors themselve, they are not CCD sensors but a special CMOS sensor capable of better color and resolution. I was reading an article a little while ago that showed the flow diagrams of both CCD and CMOS and the CMOS actually has voltage converters in each pixel and parallel out reading whereas the CCD had serial out (slower) w/ voltage converters at a later stage to just do a general boost... at least that is how the flow chart explained | 