For the advanced amateur photographer, there are many choices and decisions to make concerning picture quality. First, there is your budget to consider. Then you have to decide what type camera would fill your needs. Vacation pictures and family album shots require only a point and shoot camera that fits in your pocket. Two hundred dollars will buy a decent camera that will take great pictures if you don't demand too much of it. Like wall sized photographs or digital art images.
If you like taking beautiful pictures and enjoy seeing them enlarged for the wall, then a DSLR or a prosumer EVF camera is needed. Professional photographers prefer the top of the line DSLRs that cost thousands of dollars but repay them many times over by doing their job. The two thousand dollar versions are quite bulky and heavy for the amateur photographer to lug around all day. An alternative is the micro four thirds EVF (Electronic View Finder) type. Weighing half of a DSLR, these cameras are nearly as good in picture quality as their larger cousins.
A point made by DSLR owners is that their prime lenses often sport a faster lens opening, making them able to capture low light pictures more easily. Since the doubling of the ISO setting on your camera effectively doubles the size of the lens opening, very little is lost in the way of quality. A good EVF prosumer camera show little or no artifacts or loss of detail at 200 or 400 ISO.
A good example is the new wide to telephoto (28 – 280mm) zoom lens by Panasonic Lumix GH1. It's widest opening is only F4.0, half the opening size of a F2.8 prime lens. But by raising the native ISO from 100 to 200 you are effectively can capture the same low light photo as the prime lens at the same shutter speed. As for the smoothing and blurring of backgrounds when using telephoto lens settings, it is true that the larger openings of prime lenses does this nicely. But the gaussian filter effect available in most image editors simulate this effect quite well.
If the minute appearance of artifacts concern you, there are many artifact removing software on the market. At the highest ranges of ISO (1600 – 3200) you can expect some loss of detail as well. However, the top of the line EVF cameras include sophisticated software that does a great job in retaining most of the lens detail at these lofty ISO settings.
Other characteristics that affect picture quality are distortion, trueness of color rendition, and cropping ability. All zoom lenses show some barrel distortion at the wide end and to a lesser extent, some pincushion effect at the telescopic end. The pincushion effect need not concern you too much because the usual subject material seldom includes straight lines that could make the distortion obvious to the eye. On the other hand, even a small amount of barrel distortion can be easily seen in architectural photos. There are some cameras that digitally correct for some if not all of this defect. If not, there are software programs that can correct for barrel distortion without affecting the quality of the image. One such is RadCor, a software that corrects for any distortion from specific makes of lenses and cameras.
While it is true that RAW images can produce extremely sharp images, most of us rely on the convenience of JPEGs. For this reason it would be well for you to pay attention to the type of engine used to convert the camera images to JPEGs (fine or regular). The latest in converter engines is the Venus Engine with dual CPUs used by the Panasonic Lumix GH1.This latter is affected by the number of pixels you have to work with, more being better. Of course, there is such a thing as too many pixels, having you end up with extra large image files that require a huge memory capacity fin your computer. The bottom line when choosing a digital camera is to examine the test photos and use the comparisons with other cameras to help make up your mind. There is no substitute for quality.