Let's see what mistakes people make when they decide to buy a compact camera for a day-to-day use:
1. My camera has lots of megapixels!
Yes, it does and it's a good selling point but why wouldn't images come out as crispy and "cool" as they would from a good old dSLR? Simply because the sensor on a small camera is also tiny and the pixels are really scrunched together. This will also give you a bad low light performance.
2. My camera has lots of zoom!
Well, that's just great but how did they manage to put so much zoom in such a small camera? It's not so hard to come up with a "how" but let's see what the production of a large-zoom-small-camera drawbacks are. First of all, the big zoom means a really tiny sensor on a small camera body - this will give you lots of noise (grainy images) in low light. Second, the batteries will drain faster because of all the zooming in and out. Last, the more you zoom the higher shutter speed the camera will need to keep the image from getting blurry. So, forget about shooting from your hand at max zoom in poorer light conditions. The camera will just automatically boost the ISO and play with the shutter speed to make it possible to take the shot, however this will give you motion blur and noise.
3. My camera has a touch screen (just like my iPhone).
I have never been a supporter of touch screens on cameras and let me tell you why. I like setting my camera by myself and using what I think are the best settings for certain conditions. I guess, maybe, it would be easier to set it all via a well-sized touch screen but the setback is that I could easily ruin a certain setting by accidentally touching the screen. Just think about how many times you started an app on your phone that you tapped on by accident. I simply prefer buttons to touch screen.
So, the 3 points that I made above are common selling points (as well as discounts)however they will not do you any good for taking nice photos both outdoors and indoors. I've sold quite a few cameras in my day so here's my advice:
1. Don't go for the megapixels. 10 or 12 is the max you need on a small camera (Do they make them with less nowadays?)
2. 10x zoom is the max you need and trust me I've used some telephoto lenses which proved to be impractical for most cases. The beautiful vacation shots that will wow people will be the no-zoom wide shots. Paying for a 14x-20x zoom camera is just impractical.
3. Use the built-in presets for different conditions on your camera. I can see all manufacturers are making great improvements there.
4. Learn how to use the P (program) mode because it's kinda cool when you can get a little more creative.
5. Search for a compact camera with M (manual) settings and a viewfinder. One day you might want to make the transition to a dSLR and you'll know everything about it from its smaller brother by having used it on M and looking through the viewfinder.
Here are my camera suggestions:
1. Canon G1X (any G series Canon is a great choice G9, G10, G11, G12 - comparatively big sensor, later models shoot RAW, great dynamic range for a small camera)
2. Sony NEX (pricey but really cool and the quality of the build is very good)
3. Olympus PEN (Olympus are really on top of the game when it comes to the PEN range)
4. Nikon P7100 (or a later of the series will ensure great value for your money)
5. Canon s100 (or look for the older but still amazing s90 and s95)
You can't just say bad words about small cameras compared to their big dSLR counterparts. Let me make a few points about how great small cameras are.
1. You can shoot great video with fast and precise autofocus (some video advice here).
2. You can just leave the camera hanging from your wrist.
3. You can get a nice small gorilla tripod and attach the camera pretty much anywhere.
4. You have a built-in macro function in all the compact camera lenses (well, in the non-interchangeable lens ones)
5. Fun to use and easy to understand. You can just hand it to your friend and he will take a nice photo of you by the Eiffel tower.
Keep taking nice photos and try P and M modes on your compact cameras from time to time.