Once you have decided what you want to use the camera for, you need to know what types of cameras are available. Basically, there are two types of cameras: fixed-lens compact cameras and single lens reflex (SLR) cameras.

Fixed-lens compact digital cameras
Suitable for most of us who want a compact, easy-to-use, easy-to-carry digital camera that automatically adjusts the settings, these cameras come with a pre-fixed lens. There is a wide range of these cameras, however, with some of them matching or even surpassing entry-level SLRs in quality:

Ultra-compact digital cameras for the general consumer: These are priced moderately to high and are slim and small in size. Though some may match the features found in compact digital cameras, most of them have just the bare essentials, with no manual controls and viewfinders. This does not mean that they are inferior in quality; ultra-compacts feature highly sophisticated and innovative technology that results in very high quality pictures. Most of them compare well with other types of compacts in terms of resolution (megapixels) and zoom.

Compact digital cameras for the general consumer: Bigger in size than the ultra-compacts and often cheaper, these cameras offer more features and allow greater manual control and flexibility. Some allow a limited amount of manual control over exposure (ability to adjust aperture size and shutter speeds) but not over focus. The very low priced ones (with low number of megapixels) may not offer the high quality most compacts do.

'Prosumer' advanced fixed-lens compact cameras: With greater manual control and professional quality results, these cameras cater to the general consumer who wants the quality of a digital SLRs without the high cost (that explains the name 'prosumer'). They have better quality lenses than the cheaper compact cameras and offer a greater range in focal lengths, with greater zoom and wide-angle capabilities. Some also have more advanced features such as image stabilization, which reduces the negative impact of unsteady hands.

Single-lens reflex digital cameras or DSLRs
The choice of professionals and enthusiastic amateurs, the key difference between these cameras and the compacts is that they allow you to change lenses if you wish. Since no one lens can take all types of photographs, being able to screw on different lenses opens up tremendous possibilities for the photographer. (For information on the different types of SLR lenses, click here.)

The premium optical elements used in these cameras give very high quality images and allow the photographer to choose not only exposure and focus, but also aspects such as white balance and depth of field. DSLRs don't have some features present in the compact cameras, such as LCD screens that give a preview of what you're shooting. You are forced to use the viewfinder. They usually do not have the ability to shoot video footage, unlike most compact digital cameras.

Click here for more information on DSLRs.

Advantages of compacts
Offer video option
LCD screen for preview
Light and portable
More affordable than DSLRs
Convenient and easy to use

Advantages of DSLRs
Greater manual control, flexibility
Lens can be changed
Good quality photographs under all kinds of external conditions 
Better lenses and optics
Better resolution
More sophisticated accessories
Ideal for professionals