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4/5mp ultra small digital cameras (with sound):

Canon IXUS I / SD10 (4mp, no optical zoom, max shutter open 15sec, SD Card, 320x15fps) about £200,
Canon IXUS IIs (3mp, 2x Opt, SD, smaller than the IXUS 400/500, 15sec, 640x15fps) about £210,
Canon IXUS 400 (older model) / 410/430(uk) (4mp, 3x opt, CF, less noise than 500, 320x video max resolution) about £270,
Canon IXUS 500 (5mp, 3x opt, CF, 15sec exposure, 640x video only 10fps) about £300.

Others:
Pentas Optio S4 (4mp, 3x opt, SD, 4sec max) about £200
Nikon 3200 (3mp, 3x opt) £170
Nikon 4300 (4mp, 3x opt, not sure of size, old model now) £200 no sound
Nikon 4200 (4mp, 3x opt, 640x480x15fps) £240
Nikon 5200 (5mp, 3x opt, 640x480x30fps) £300

things i'd like from a camera: sound with videos (a must - this rules out most olympus cameras), long shutter speed (1 sec is standard i suppose but more eg 2,4 or more is better - and control over this would be nice), shutter speed / aperture to be displayed on screen when taking photos would be nice - canon don't seem to do this :( - also would like speed. optical zoom. good macro mode. i like having a good choice of ISO levels, eg 50,100,200,400 on the canon a300 i have.

so - which is more important small size, or big optical zoom - i'm not sure, but i think having a smaller camera with 3x optical zoom would be better, then you can take it anywhere without worrying about it, and therefore wouldn't miss any photo opportunities.

perhaps wait about a year and the canon ixus 400/500 will be about £200? or perhaps there'll be a whole new set of cameras out... :)

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