I have no horse in this debate here, but I remember reading this from dpreview when the 50D came out (read below)... I remember thinking to myself that a camera like the 7D would never come out, because the pixel race was obviously over. Now, I don't think anyone would argue that the 7D not only resolves more detail than the 40D, but also has better high ISO performance as well (read 7D review following 50D). In conclusion, I agree with HDNitehawk. Technology can even the playing field even if pixel density is greater.
50D review: "Let's have a look at the really important stuff then: Image quality. Below ISO 1600 image output is clean with well balanced contrast and colors and as you would expect from a DSLR with a 15 megapixel sensor the 50D delivers a fair amount of detail. Having said that, in terms of per-pixel sharpness the 50D cannot quite keep up with the better 10 or 12 megapixel APS-C DSLRs in the market. At higher sensitivities the smaller photosites are clearly producing more noise (as shown from our RAW comparisons) and so Canon is having to apply more noise reduction to keep to acceptable noise levels, this of course means a loss of detail from ISO 1600 upwards.
It appears that Canon has reached the limit of what is sensible, in terms of megapixels on an APS-C sensor. At a pixel density of 4.5 MP/cm² (40D: 3.1 MP/cm², 1Ds MkIII: 2.4 MP/cm²the lens becomes the limiting factor. Even the sharpest primes at optimal apertures cannot (at least away from the center of the frame) satisfy the 15.1 megapixel sensors hunger for resolution. Considering the disadvantages that come with higher pixel densities such as diffraction issues, increased sensitivity towards camera shake, reduced dynamic range, reduced high ISO performance and the need to store, move and process larger amounts of data, one could be forgiven for coming to the conclusion that at this point the megapixel race should probably stop. One consequence of this is that the 50% increase in pixel count over the 40D results in only a marginal amount of extra detail."
7D review: "Despite the highest nominal resolution of all APS-C DSLRs and therefore a very small pixel-pitch the EOS 7D performs very well in low light situations and manages to maintain a good balance between image detail and noise reduction up to very high sensitivities. It's visibly better than the EOS 50D and as good as it gets in the APS-C class (if you prefer the 7D or Nikon D300S in this respect is probably a matter of taste). If you require significantly better high ISO performance than the EOS 7D can provide, your only option is to move into the full-frame segment."




the lens becomes the limiting factor. Even the sharpest primes at optimal apertures cannot (at least away from the center of the frame) satisfy the 15.1 megapixel sensors hunger for resolution. Considering the disadvantages that come with higher pixel densities such as diffraction issues, increased sensitivity towards camera shake, reduced dynamic range, reduced high ISO performance and the need to store, move and process larger amounts of data, one could be forgiven for coming to the conclusion that at this point the megapixel race should probably stop. One consequence of this is that the 50% increase in pixel count over the 40D results in only a marginal amount of extra detail."
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