This post does not contain any real technical solution - just info for you (as a consumer).
So, after giants of industry such as Canon, Nikon, Sony and so on start their race for megapixels, most people who no familiar with photography goes crazy about what camera to buy ? There are a lot of guides on how to choose and what are main specification you going to look for etc. I`m going to say few words about compact cameras particularly.
I presume that you know how good picture achieves. Physical sensor dimensions plus good optics making as much as possible of light information comes to sensor`s surface. Thats how it works.
In DSLR cameras there are few high end models with full 35mm sensor size and you can choose lenses from cheap (about 200$) up to expansive about 30,000 $ to make your picture looks perfect (technically of course). In compact cameras world it is much more complicated.
Since there is no possibility to change lenses what for do we need big sensor ? This may sounds stupid , but looks like manufactures thinks this way! Even in models where "lenses" are good (in this particular therms) sensors usually are not so good at all therms! And situation goes worse year by year as companies trying to put more megapixels on the same physical size.
This makes image looks horrible , especially in small details on the backgrounds. Yes, its impossible to get high resolution values with small (usually plastic) lenses and sensors that have size less then your nail! Additionally, some aberations and unnecessary noises appears - it all comes from optical physics and electronic component themselves. As a result - image looks fine on small backside LCD and ugly when you look at it on your monitor - JPEG artifacts are not the worst part! Looking on evolution from my first compact Canon PowerShot A70 (3,2 mega) then PowerShot SX100 (8 Mega) and now PowerShot SX120 (10 mega) I conclude that A70 was the best of this three cameras even it had Digic II processor, it used more power to work, it was slow but it gives good picture - now size of an image in pixels is huge but quality...
I look other models from different companies and was very disappointed - Kodak, Fujifilm, Sony, Nikon, Konica - even those that looks like DSLR whith big lenses gives pictures that not much better then simple SX120 . The only compact camera that shows a good quality picture is Leica X1 - but is comes with full size 35 mm sensor! And it costs like semi-pro DSLR ...
All other compacts are cheaper but they do images about the same as my Motorola mobile - and its not because my moto have such a perfect camera, no, not at all! It make worthless to buy compact camera now. I just want to ask companies - what for are you making this models if they are useless ? Just to show that you can make 20 megapixels for 10$ doesn't make sense if I will see huge blocky pictures where I will hardly see any specific detail ! I suppose it will be better to make bigger sensors but , probably less megapixels to give customers smaller (maybe 15x20) pictures but with better quality ?
Compacts are good when it comes to make macro, when objects are close , but definitely not for picturing landscapes!