Compact camera or Digital SLR?
I’ve never used a compact digital camera for insect photography, but I’ve seen results achieved with them that have been pretty impressive. In their favour, compact cameras often focus close and are very light and easy to carry around. That said, digital compacts tend to be limited by their small sensors that are inherently noisier than the larger sensors fitted to DSLRs. They are also affected by the compromises that are involved in the design of their lenses and focusing systems. Such cameras suit a more casual approach, and if you’re on a budget, they’re worth considering. Another option are so called “bridge cameras”, which have an SLR style body, but with a zoom lens that is permanently attached to the camera. These are designed for general photography and can produce excellent results, but they are unlikely to be as good for close work as a DSLR with a dedicated macro lens. Unfortunately, if you want the best tool for hand held insect photography, a DSLR is the way to go.
