Be sure to check out the buyers guide on DP Review (
http://www.dpreview.com/) before buying. They perform some of the best digital camera reviews out there.
Bottom line is you get what you pay for. A digital SLR is likely your best bet (as long as you put some good glass in front of it) for those serious about photography. But there are some good finds in the compact segment--just do a little homework and you'll likely find a great camera.
Justin