1. Size Things Up Appropriately
The first thing you should consider is how your new camera will be used. Is this camera going to be with you at all times? Or will it just be taken out for special occasions? Ultracompact cameras are best if you expect to be toting it around a lot. They can fit easily in a pocket and are usually quite light. Point-and-Shoot cameras are small too, but usually are a little thicker than ultracompacts, and could be carried in a bag or jacket. Extended Zoom and digital SLR cameras tend to be larger and heavier, and you might want a special carrying case, especially since SLRs often use multiple lenses. Now, in all fairness, none of these camera types are prohibitively larger or heavy, but the differences in shape and size should definitely factor into your decision making process.
2. More Megapixels Doesn't Necessarily Mean Better Pictures
Megapixels are probably the primary way cameras are judged, and while it's important, very few people really grasp why. Megapixels measure how many individual little dots of light a camera is capable of capturing. More megapixels means more dots, thus greater detail and larger image sizes. More megapixels do not mean better image quality. A 10 megapixel camera is not "twice as good" as a 5 megapixel camera; it simply means that the images will be twice as large. Higher megapixels do determine how large a print you can make from your digital photos. Anything above 5-megapixels (which achieves photo-quality at 8x10" prints) should be capable producing an image you'll be satisfied with.
3. Are you a Casual Photographer or a Control Freak?
Do you care about things like white balance, aperture, and ISO settings? Or do you just want to turn it on and start snapping? Pretty much every camera, from novice, entry level point-and-shoots to high-end digital SLRs, has an automatic mode, so the beginners don't have to worry too much (though they should probably stick to the safe waters of ultracompacts or point-and-shoots). If you're someone who wants to grow into greater control over your photographs as you learn and advance, make sure your camera can accept manual settings. All DCHQ camera reviews let you know whether or not a camera is capable of manual settings, so keep your eyes peeled.
4. LCD vs. Viewfinder
In the interest of efficiency, many smaller cameras are doing away with the optical viewfinder, meaning you'll have to rely on the LCD screen to frame and preview your photos. There are still lots of optical viewfinders out there on point-and-shoots, but ultracompact cameras typically have very tiny ones that are difficult to use if they have one at all.
Decide whether or not you can handle using the LCD screen as a quasi-viewfinder. An LCD screen of 2.0-inches or less might be a little difficult to handle; 2.5-inches and above should provide more room.
5. Extra Features
By now you should have a sense of what size camera you want, how many megapixels it should be, and how much manual control you'd like. Now comes the fun part: deciding what sort of bells and whistles you'd like your camera to have. Much like options on a car, these features aren't critical, but can make using your camera much more fun. Options available on certain cameras include: movie mode (taking high-quality video clips with sound in camera), panoramic stitching (which joins multi-photo panoramas into a single photo), burst shooting (taking multiple pictures in rapid succession, good for action sequences), audio annotation (attaching commentary to your images), and macro photo capability (the ability to take highly detailed, extremely close-up photos of objects.
6. Things You Absolutely Need
Memory Card: Most cameras come with some internal memory or a sample card, but that's never enough to hold more than 3 or 4 images at a time. After you've bought your camera, you'll need to get a memory card that can hold at least 512MB or 32GB of data. This will allow you to capture hundreds of images without needing to delete or transfer any to make room.Most popular today are Secure Digital (SD) cards.
NiMH Batteries: If you've purchased a camera that takes 'AA' Batteries, using traditional alkaline batteries will be a big pain. Digital cameras drain alkaline batteries exceptionally fast, and you'll be spending tons of cash keeping your camera powered up. By getting NiMH rechargeable batteries, you not only ensure that your camera gets long-life from a single charge, but when the batteries are drained, you can just plug them in and start fresh. With consistent use, a single pair of NiMH rechargeable batteries could last well over a year.
7. You Get What You Pay For
This is an important point. You might see a great deal on a digital camera that ends up being a lemon. Being aware of the general price ranges for digital cameras is important, because if you end up paying bargain basement prices, you might end up with a low-quality camera.
For ultracompacts and point-and-shoots, the standard price range is between $200 and $300. Extended Zoom digital cameras can be anywhere from $300 to $500, and digital SLRs from $500 and up into the multi-thousands. DCHQ strongly suggests that if you see a bargain below these price ranges, read the owner and user reviews. By seeing what actual owners of the camera say about its performance and durability, you can find out whether what you're seeing is a great deal or a big mess.