I don't own a crystal ball, but it seems to me that small digital cameras are on the way out. We have 3 still photo cameras in our house and we do use them, but we really don't have to. I have a Nikon D40 SLR that is really our main camera. Fortunately no phone or camera company has tried to combine SLR's and phones... "Hey, are you happy to see me or is that a phone in your pocket."

With that said, I have had 3 phones in the last year, the HTC Tilt, Motorola Droid, and my current iPhone. The tilt took pictures that could only be described as hideous. To get a clear picture one would have to freeze time itself. The Motorola Droid took some of the most amazing video and pictures I have seen out of any device that size. The iPhone only takes good pictures and video if you full light.

The other contributing factor is the scale of these pictures. Who prints pictures? really... how often do you print all your pictures anymore? It's all digital and therefore the quality and pixel density never leaves the digital world. Take a picture/video and put it on the internet... DONE! I can every picture I have ever taken for less than the cost of 1 printed picture... WHY PRINT!!! Oh sure, Grandma just loves those pictures, so get her a digital picture frame that will update itself.

Some would say that they don't want a confusing device to take pictures... Me either, touch the camera icon and whamo... it's a camera....