It does make sense to stick with advanced P&S if you want small size and DV as must.

If you don't really need to print very large photo, I don't think you need a camera with 8-10MP. 5mp should be good enough. I think the high mega pixels thing is a market thing.

But DSLR does perform much better in indoor low light condition. They focus much acurate and fast. They can achieve much balanced exposure. They have almost no shutter lagging. Sizewise, Nikon D40X and Canon XTI are close to S3 (of ccourse, no inbody VR or IS).