A question that's often asked in photo-related forums is, "What camera should I buy?" One of the common kneejerk responses is to buy a DSLR. In my opinion, however, buying a DSLR shouldn't be an automatic decision.
The thing about cameras is that they aren't appliances. You can turn on your TV or radio or stove and it will perform a good job every time unless it's malfunctioning. When it comes to appliances like those, the results you get are quite correlated with the quality of the appliance. Audiophile-quality speakers will definitely make your CD sound better than will $20 computer speakers, every time.
Cameras, however, are more like instruments that are heavily dependent on user skill to produce good results. Thus, buying a DSLR is not going to guarantee good photos any more than buying a grand piano will let you play like a virtuoso.
I think therefore the most important factor when buying a camera is whether the user intends to spend significant time and effort to learn photography. If they aren't, then they will get similar results with almost any kind of camera (barring extreme comparisons such as a webcam vs. a DSLR). Indeed, high-end point-and-shoot cameras such as the Canon S90 are getting quite good at high ISO noise, and I think buyers who can't or won't learn photography are better off with such a camera. Otherwise, a DSLR would be overkill and would be like an oversized point-and-shoot.
For users who want great image quality and are willing to spend the time and money to get such quality (not just buy the camera), then a DSLR may make sense. In Part 2 of this post, I will discuss approximately how much time and money are involved, using myself as a case study :)