My old 5 megapixel HP R707 is not a bad point-and-shoot camera, as the late 2004 DPReview.com review shows.
But there are many things you just can't do with a pocket digital camera, so a couple of months ago I got myself an entry level DSLR, the Nikon D60. It has its shortcomings, as the (probably intentional) lack of EV bracketing or the absence of live-view and video recording features, but overall picture quality is great out of the camera. Here are four pictures I couldn't have taken with my R707:
Depth of field effect, almost unachievable with pocket cameras:
Continuous autofocus is best for shots like this one:
A small crop of a huge 10.2 megapixel image:
Another case of DOF:
For the curious, here's my flicker photostream with more pictures. I also recently used the D60 to take the office pictures on the udpated about and jobs sections at lemonteam.com.