It is true, that a more expensive camera will not make anyone a better photographer. Photography is a mixture or art and technology, and skill with both. Your mental vision of an image you want to create won't go anywhere, if you don't have the right gear, and know how to use it.
When we used to shoot film, we refered to the camera as a "Light-tight box". As long as it would operate the shutter accurately, and kept the film flat, it didn't really matter what camera you were using. The hardware quality was in the glass and film. If you wanted grainy images (good for a certain look), you would use a faster color film (although modern film has a much smaller grain structure), or one of the B&W films that had a large grain structure. If you wanted fine grain (high resolution), you would use a slower ISO (ASA) film such as Velvia 25, or one of the portrait print films such as Kodak 160 VC (VC is Vivid Color - nice for landscapes). It all depended on what you wanted the end product to look like.
If you needed cable release, DoF preview, manual exposure control, timer, faster shutter/flash speed, etc., etc., then you needed to start looking at a body that provided the control you needed.
With digital, all of this is still true, except for the film. If you want high quality images with enough resolution to provide the products of a professional photographer (think 20"x24" and larger), you will need a camera body that has enough pixels, and those pixels need to come from high quality
photosites on the sensor (photodiods with micro lenses). 10 megapixels on a large DSLR sensor will have less noise and better image quality than 10 megapixels in a small P&S sensor. If you only want noisy, grainy images to meet your artistic needs, then a decent P&S might be perfect. If your vision is not limited to this one style, then you will need a sensor that can also provide the images of high quality film. You can always take a high-res image and add the nifty grain in post processing.
Then there is the RAW data processor in the camera, that has the most effect on the final image, with everything else being equal.
The camera has become the film and body, together.
So; assuming you have the same photographer, creating the same image, from the same location, with the same composition & lighting (all things being equal), the professional DSLR camera, with good glass, will definitely produce a much higher quality image than a similar megapixel P&S. It can be enlarged easier, enlarged further, will have less noise, more color range, more dynamic range, etc.
P&S cameras were really great, up to 8 megapixels. Some of them really could produce outastanding image quality. I wish Canon would produce a new G-series camera with a high quality 8Mp sensor, and stop this Mp race. Leave that to the pocket camera crowd.
Edited: twice.
