Expect 2005 to be the year of "moving up."
To combat falling prices, camera manufacturers (and I'm talking about camera manufacturers who make digital cameras -- Nikon, Canon, etc -- and not consumer electronics companies making digital cameras -- HP, Casio, etc) are this year introducing cameras that bridge the pro-sumer line (typified by the Canon S1is and G6) and the DSLR (digital SLR, like the Nikon D70).
The bridge product is the low-end DSLR. Nikon in the UK announced its bridge product last week:
Nikon will be introducing a second D-SLR, specifically designed for consumers looking to upgrade from a digital compact to the next level of digital photography. The camera will be affordable and easy to use, perfect for the D-SLR beginner.
Canon had earlier indicated it too would shift its focus to cameras that are more expensive. It could be argued that Canon already has a low-cost DSLR (its Rebel series) but I think we can expect an even cheaper model that comes with fewer features.
DSLRs are crucial for camera companies, though not for the consumer -- for exactly the same reason. DSLRs cost more initially, and then bring in additional revenue (read: expsnse) through expansion: more lenses, more flashes, more filters, etc.