The market for digital cameras has now overtaken the market for still cameras, and the range of models stretches from cheap novelties that double as key-rings to Sinar studio cameras capable of the highest quality. The manufacturers are therefore looking forward to a bumper Christmas. But while digital cameras have never been better, or cheaper, buyers still have to make compromises.

Nor does this mean that traditional film-based cameras have gone away. In fact, Jon Tarrant, editor of the weekly British Journal of Photography, points out that "film cameras are still miles ahead by units, and miles ahead by value as well. The UK probably did sell more digital cameras this year, by value, but in global terms, digital is just a drop in the ocean. Of course, it's where the growth is."

Last year, according to research firm GfK Merchandising, UK buyers snapped up 3.1m film cameras and 0.8m digital cameras. What got manufacturers excited was that digital cameras cost about £311 each, on average, whereas film cameras cost about £70. Digital cameras were well behind in unit sales, but almost identical in value.

This year, digital will take a clear lead, according to Colin Martin, marketing director of the Jessops chain of camera shops. UK sales of film cameras fell from 3.4m in 2000 to 3.1m in 2001, on GfK figures, and he thinks they will fall again this year. By contrast, sales of digital cameras have been growing fast, and he expects them to reach 1.5m this year.

Everyone acknowledges that the comparison depends on ignoring UK sales of 13.1m single-use "disposable" cameras: they could be counted as sales of either cameras or film. But there is no doubt about which way the market is going. And with only 9% of UK households now owning a digital camera, according to GfK, there is plenty of room for growth.

What is not clear is who is going to come out ahead. Digital photography is a particularly exciting market because it takes in a battle between long-established companies with strong traditions in optics - Nikon, Canon, Olympus, etc - and newcomers with roots in electronics, computing, or even printing. Toshiba, Samsung, Epson and Hewlett-Packard would probably not have entered a market based on derivatives of the Leica, but electronics gave them an edge. Hewlett-Packard, originally an electronics company, exploited its knowledge of colour printers, inks and paper to produce finely tuned systems that worked well together.

It has been an invigorating battle. It has produced designs such as the Sony Cybershot range, with the lens right at the curved end, which would be impossible in a film-based camera. However, in general, it does seem that the boxy formats developed over decades of film camera use still work well, and perhaps it is no surprise that digital and film cameras are now starting to look much the same. In fact, Colin Martin thinks digital, APS (Advanced Photo System) and 35mm film cameras will eventually be mixed in Jessops stores, instead of being displayed in separate areas. But the displays will undoubtedly include cameras from firms such as Sony and Fuji, who grabbed market share when the established camera manufacturers thought digital image quality was too low to represent a serious threat.

Traditional camera manufacturers also lost out because the market concentrated on the resolution of digital cameras - the number of megapixels - at the expense of established criteria such as lens quality and handling. As Simon Joinson, editor of Total Digital Photography, quips: "Resolution is what people buy because they don't under stand the rest of the specification."

However, things are changing because resolution is ceasing to be a key differentiator. Joinson says: "Four to five megapixels is all an average user will ever need, unless they want to enlarge a small part of the frame. In a good camera, 5mp is more than enough for all but the most serious user."

The general feeling is that cameras offering 1.3mp to 2mp are good enough to print snapshots up to about 6 by 4 inches. Those with 3mp to 4mp should be OK for 10 by 8 inch prints. You don't usually need more unless you go to larger sizes such as 12 by 16, which average users rarely do.

If you take only pictures for the web or to email to friends, you can probably manage with less. What used to be the PC's standard graphics resolution, VGA, is only 640 x 480 pixels, or 0.3mp. You can take pictures at 2048 by 1536 pixels (3.1mp) but you'll have to reduce them to fit the screen.

Lens quality is also significant. Like many people, I bought a digital camera mainly on its specification: at the time, 1.3mp was considered good value for £599. There are now "better" cameras - more megapixels - that produce worse results. Of course, I would never have expected a cheap camera to produce negatives as sharp as a Nikon just because both used 35mm film, but somehow I was surprised to find that applied to digital cameras, too.

Another shock was to find that digital cameras can produce different results even when they have the similar mp ratings and quality lenses. This isn't because of the size of the CCD but because of the way the image is compressed. Some digital cameras can produce a RAW (uncompressed) image of what the CCD sees, but that could be a large file. In real life, the image is compressed into a JPeg: you sacrifice some quality for a much smaller file size. This means many more pictures can fit on a 16MB or 32MB storage card. But JPeg is a "lossy" format (information is lost in the compression). If the camera compresses the image too much, the quality goes down.

Digital camera manufacturers often give you a choice of image size, typically between 640 by 480 (VGA) and 2272 by 1704 pixels (3.7mp). They rarely give you much choice of compression, though it is possible. The Canon Powershot S45, for example, offers three compression settings, including Fine and Superfine. Setting the largest image size (2272 by 1704) and Superfine resolution produces JPegs of about 1.6MB to 1.8MB each. If you typically take 60K VGA snaps or average 200K to 600K files, you might be surprised by the detail. But if you want more, you can choose Canon's CCD-RAW format, download the uncompressed image data, and worry about converting it into a usable format later.

If you have a negative, you can always try to get more out of it, by scanning it again with better settings or by using a better scanner. But once you have taken a digital photograph, that's it. Anything you did not capture at the time has gone forever. To an extent, you can fake it by using "interpolation": in other words, get some software to examine two pixels side by side and guess what would have been between them, if it had been recorded. But the result is never the same.

But the very worst drawback with digital cameras is what I call latency, and Join son calls "shutter lag". Having grown up with film cameras, I expect to press a button and capture what I see in the viewfinder. For this article I snapped someone cycling past my house, and by the time the picture was taken, he was almost out of the frame. This makes it hard to take decent pictures with digital cameras, but how often does anyone mention it?

"We check shutter lag when we review cameras," says Joinson, "but we don't measure it. The camera has got to set the focus, set the exposure, send a signal to the shutter and so on, and it can take half a second or a second. With some early cameras it could be more than a second. It can be a serious problem, and only the very latest cameras have what I would call an acceptable shutter lag. Half a second is still considered good by most manufacturers."

Shutter lag is one reason why you should never buy a digital camera without trying it first - and in digital's favour, at least you can go into a good camera shop, take lots of pictures and see the results instantly, if only on the LCD screen built into the back.

There may be a solution. Recording digital images is free - it consumes no film - so the camera could "take" a series of pictures before you press the button, says Joinson. Then when you take the picture, it just saves the last one in memory. A combined still/movie camera that can apparently work this way is the forthcoming Fuji FinePix M603. Fuji expects to have two models out before Christmas at £549.99 and £599.99.

Photography has boomed at times when amateurs and hobbyists have been able get access to the same cameras as professionals, or cheaper equivalents that often took the same lenses. That was true in the great days of the Leica and Contax rangefinder cameras, and more recently, when Nikon, Canon and Olympus SLRs were all the rage. It's not true in digital photography today. Pros are often using cameras that cost £2,000 to £5,000 while most "affordable" digital cameras are little more than souped-up snapshot cameras.

But we are getting there. And once the megapixel wars are over, and the focus switches back to picture taking qualities, digital photography could be not just convenient and fun but, finally, satisfying.

· In the days before personal computing, Jack Schofield edited a number of camera magazines including ZOOM, Photo Technique, You and Your Camera, and the Photographic Journal of the Royal Photographic Society.

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