Being an old SLR photographer (Minolta) it took me awhile to wrap my arm around digital ameras as anything other than a gimic. After researching though, digital photography is actually superior as far as image manipulation, processing costs etc. Most people only picture (no pun) the small compact cameras like the one I use now, an Olympus D490, which is 3 years old. I've been researching Digital SLRs that are awesome, but pricey (1-5 grand). The digital SLRs accept a variety of lenses, and some MFGs cameras are even interchangable with their film SLR cameras.
I'm probably going to get the Olympus D-1, which is about 1300 bucks. It's AWESOME.
It's great to be able to choose and tweak your photos in Photoshop and only print the ones you want, rather than have to process a whole roll for one picture. The digital SLRs initial image, when captured, is actually superior to that of a film camera.
Check out PC Photo magazine for great info.