<font color="blue"> I'm thinking good/great digital camera and order prints as needed. I believe in the long run this will be cheaper?. </font>
Regardless of the camera you use, I suggest using
EZ Prints, you upload your images and can order any size print you want at very reasonable prices.
<font color="blue"> Anyway - wondering if I should be looking at the ~$800 + lense digital SLRs Canon rebel XT etc. or The ~$500 Canon S2 etc. I'm partial to the Canon for an SLR as my Mom & Brother both have film versions = compatible lenses. </font>
The lenses probably will fit, but I do not believe you will get the autofocus, metering, etc because the latest Digital Cameras from Canon use the EOS system.
<font color="blue"> Also does very poorly in backlight situations (could be operator error).</font>
When you have light behind the subject, use a fill flash, or make sure you meter (if you have Apeture Lock A/E) on the subject -- such as at their feet so the back light won't cause the camera to use a fast shutter speed.
The glass (lens) is what makes great photos -- so if you go the DSLR route, the lenses you end up buying will not be cheap. If you ever plan on taking photos of kids/grandkids inside a gymnasium -- you might as well just leave the P&S at home -- the small flash will not reach your intended subject, and without flash, the images will be blurry. But with a DSLR, you will need to buy an f/2.8 or less lens and shoot at 800, 1600 or 3200 ISO to be able to stop the action in those dimly lit gyms. I have a 70-200 f/2.8L that cost me over $1100. I just recently bought an 85mm f/1.8 for $348 which is a great lens for taking indoor basketball or volleyball pictures. Different shooting conditions require different type lenses. I also have a 28-75 f/2.8 that is a great all around lens for family photos. This lens was about $360 or so. As you can see, a DSLR can start costing quite a bit if you plan on collecting lenses. If I wasn't doing sports photography as a side business, I would not have bought a DSLR.
P&S cameras do alot of in-camera sharpening, which most photog's using DSLR do not want (but the camera's do have options to sharpen more in camera if you wish) -- for they want to do the post processing of the image themselves.
The DSLR camera's however can take good pictures even at 3200 ISO (Canon 20D especially), where the P&S may not have the ability to change from it's 100 ISO setting, or if you can change the ISO to 200 or 400, the photos will be extremely grainy. So, if you intend on taking alot of low-light photography and do not wish to use flash, the DSLR would be something to think about.
You will have to decide for yourself which way you want to go -- but from the sounds of what I think you want to do with a camera, I think the P&S is the way to go for you.
