I use mainly a Canon 5D MkII. Now yes, this is a very expensive camera, but I've found it to be streets ahead of everything my 450D before it did. My gf has a Canon G11 (top of their compact range), and last night we went out to take 'arty' photos (not THAT sort of arty) of bluebells in our local woods. Despite her being quite vociferous at times about why I needed such an expensive camera, why was it so big, so many lenses etc, she quickly saw that for those sorts of shots where a narrow DoF really makes the photo, her G11 simply couldn't hold a candle to it. Also shots into the dying sun the little CCD really struggled with, whilst my full-frame SLR was just fine.
That said, for shots in good light, the compact can certainly hold its own against a camera worth 6x as much unless you're printing silly-big. It also has the advantage of being taken everywhere, whereas my SLR gets left at home on occasion. It is fully adjustable, and even has manual focus, but is nowhere near as easy to use in these respects compared to even the most basic of SLRs. I have to say my 'hit rate' when using even such a high level compact is low, when compared to when I've got the SLR with me.
These days you can get a decent last-generation 2nd hand dSLR for about £250 from a camera shop, probably with some sort of guarantee. You can't really go wrong there, and it will be better than even the best current compacts. If you're really hard up. You can get a good film body for £8-10, nifty-fifty autofocus lens for £70, and a lot of film and developing (and scanning) before you get to the cost of a new dSLR. If you're happy to be manual, I'm sure you'd get an old Olympus OM-10 and 50mm f1.8 lens for about £30 all in. That's a serious amount of camera for your cash. Cost of a 36 exp slide film and scanning at 20MB .tif files is about £10, meaning each photo is 28p – still pretty cheap!