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For years, the Holy Grail of digital photography has been a camera that can match the clarity, sharpness and color fidelity of film.

With their latest 3-megapixel models, the industry is coming closer, good news for serious photographers and casual snapshooters alike.

At the same time, the industry has improved on the longstanding advantages of digital photography, including instant review of snapshots, easy transfer of images to a computer and the creation of photo-quality prints with a home ink jet printer.

While digital camera sales remain behind film camera sales, Americans are impressed enough with electronic imaging to buy digicams in increasing numbers.

Last year, 3.1 million digital cameras were sold, according to Ron Glaz, program manager for IDC consulting firm's digital imaging program. This year, 5.1 million are expected to be sold and next year, 7.1 million.

About 5.4 million of 103 million American households had digicams at the beginning of the year, says Andrew Johnson, an analyst with the Gartner Group. By comparison, almost every household had a film camera, if you include disposable cameras. But digitals are selling well, Johnson says. "And with prices coming down and the holiday season soon starting, things will get really busy."

Meanwhile, digicam owners can share their images over the Internet or buy them through such services as Club Photo, Zing and Shutterfly, adding to the convenience factor. Much of that online activity, digicam market analysts say, is because of the improvement in digicams.

The newest offerings from digital camera-makers improve quality in part by capturing more pixels - the tiny dots of information that combine to form an image. For example, a camera that records an image 1,600 dots across by 1,200 pixels deep is storing 1.9 million megapixels. More pixels mean a sharper, clearer image.

Earlier this year, 2-megapixel cameras were state-of-the-art in the consumer market, producing images that were realistic in prints at sizes up to 5-by-7 inches. Now, digicam makers offer 3-megapixel cameras for consumers that produce even more brilliant results at sizes up to 11 x 14, and Olympus recently put a 4-megapixel camera on the consumer market for $2,000.

At the heart of these digital wonders is the CCD (Charge Coupled Device) image sensor, which gathers information electronically on a grid of light receptors to create a picture and converts each pixel to a number that can be stored in the camera's memory.

In addition to increasing the pixel count, manufacturers are improving the rest of the camera by using better glass in their lenses and adding automatic exposure overrides so that savvy customers can adapt to difficult lighting conditions. They've added the ability to capture short videos with sound, and some cameras now come with a hot shoe or an outlet for an add-on flash.

Most come with USB cables for quicker transfer of pictures to a computer, although owners of memory card readers for their PCs won't have to worry about that.

You'll pay for these hot features: $1,000 or so. But that's good news for those with tighter budgets because capable 2-megapixel cameras have dropped into the $500 to $700 range.

To survey the state-of-the-art, I looked at three cameras with 3-megapixel ratings and one that claimed even higher resolution. What we found was technology that could render sharp portraits and small group shots but still can't deliver the detail required for very large group shots and landscapes.

Here are the results:

Epson PhotoPC 3000Z

The Epson PhotoPC 3000Z ($1,000) took top honors in our review. Slicker and lighter than its older brother, the PhotoPC 850, this 3.34-megapixel camera never took a bad picture. Image color was accurate and at higher resolution settings, the photos were super sharp.

An enhanced resolution mode, called HyPict, boosts the size of the image file by increasing the amount of information in each pixel. The enhanced mode produced images that were 2,544 by 1,904 pixels, the best of the cameras reviewed here. For the average user, that means a crisp shot with details in the highlights and shadows. For the digital camera enthusiast, it means a shot that can be blown up to 12- by 17-inches without noticeable degradation.

Epson ships the camera with a 16 megabyte CompactFlash card, four rechargeable Ni-MH batteries (good for 200 to 300 shots) and a power cord to plug into an outlet when the batteries go. The freedom from batteries made a major difference in how I shot photographs indoors - I reshot as many pictures as I wanted to because I never feared running out of battery power. The lens is the equivalent of a 34-mm to 102-mm lens on a 35-mm camera.

A couple of things about this camera bothered my practical and aesthetic senses. First, the power button, centered in the middle of a dial on top of the camera, required repeated pushing because it was recessed. A toggle switch on top of the camera would have been a great addition. And while the PhotoPC comes with a lens cap that connects to the camera by a lanyard, Epson should follow Fujifilm's example with a self-protecting iris-style lens hood.

Nevertheless, Epson's best lives up to the line's reputation.

Olympus Camedia C-3030 Zoom

While Epson won our contest, the Camedia missed top honors by a hair. At 11 x 14, its pictures weren't quite as sharp as the Epson's, but at smaller sizes you might not notice the difference.

The sharp detail of its 2,036 by 1,536 pixel images, accompanied by dead-on color, made this camera a hit at a recent party. The camera comes with a 16-megabyte SmartMedia memory card, the equivalent of a 32-to-96 mm zoom lens and a remote control, so you can plant the camera on a tripod and snap from far away.

If you're a good enough photographer to handle this camera in manual mode, you'll be pleasantly surprised at how much control you have over exposure, aperture and focus. Manual focus, for example, is made easier thanks to a slider on the LCD screen on the back of the camera.

The biggest downer was the onboard menu, which had more layers than a bad video game. Changing from one resolution to the next required working through three submenus. I like to mix up the resolution of photographs in a series of images, depending on the subject. Quick snapshots of the family for posting on the Web don't require the same detail as closeup photographs of insects or flowers for publication. Before I could do that easily, I had to carry the manual with me for a few days.

No one put much thought into the lens cap. There was no strap for it, and it came loose in my camera bag several times.

Toshiba PDR-M70

The watch-phrase for the PDR-M70 is "ease of use." This $799, 3.37 megapixel camera made it easy to do just about everything, including shooting up to 5 minutes of AVI video.

I've never been a fan of shooting movies with a digital camera designed for still pictures, but the Toshiba's output really caught my eye.

Overall, the images recorded by its 35-to-105 mm zoom weren't as good as the Epson or Olympus photos. It offers a choice of two resolutions, 2,048 by 1,536 and 1024 x 768, each with three different levels of quality, and stores photos on a 16-megabyte SmartMedia card. While you can override some of its automatic-exposure features, this is basically a good point-and-shooter.

The Toshiba's most distinctive feature has nothing to do with photography - if you don't want to take pictures, you can use it as a digital tape recorder to store an hour of sound.

The PDR-M70's cap was even worse than the Epson's or the Olympus'. It was difficult to put on, had no lanyard, and popped off in my camera bag.

Fujifilm FinePix 4700 Zoom

Despite its snazzy design and compact size, this $800 pocket camera couldn't measure up to the competition in picture quality, with images that often displayed a bluish tint in poor light.

While Fujifilm calls attention to the size of its best picture from the FinePix - 4.3-million pixels - the camera actually uses a 2.4-million sensor "Super CCD" that boosts the amount of color information that each image file holds. Rather than a grid of photo sensors, it has a zig-zag pattern changing the way in which information is processed. Although its 2,400 by 1,800 pixel photos had better color than some of the images shot with other digicams, the photos weren't as sharp.

On the plus side, the FinePix 4700 has several higher-end settings, including a night mode, as well as tweaks for its built-in light meter. It also will shoot 80-second AVI movies at 320 by 240 pixels. The camera sports a lens that ranges from 38-to-144 mm and stores photos on a 16-megabyte SmartMedia card.

On the downside, the buttons on the back of the camera were tiny and hard to push, and their layout was confusing. I had to remind myself to hit a button on the side of the camera to turn on the flash.

While using the camera's software to transfer photographs to my PC, I discovered there was no way to upload all the photos at once. Technicians at Fujifilm acknowledged this deficiency and suggested a workaround, but the programmers shouldn't have missed it.

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