This used to be he case - all Nikon's sensors were 1.5 times smaller than a 35mm frame, and Canon's consumer/prosumer models were 1.6. Canon had full frame cameras though, with the 1Ds series, and later the 5D.
Nikon have caught up though, and now the higher end models D700, D3 and D3x all have sensors that are full-frame, levelling the playing field.
It only matters if you want to experiment with shallow depth of field - it's far easier to blow out backgrounds with larger sensors.
Wide angle shooters used to like full frame cameras as their old film lenses became wide again, but lately manufacturers are making ultra-wide lenses for smaller sensor cameras to compensate.
I hate the term "full frame", it implies that a sensor is lacking in some way. All sensors are "full frame", it depends on what you're comparing it to.
The term full frame was invented for those 35mm film users switching to digital.
Don't forget there are sensors (and film) in formats much larger than even "full-frame" 35mm!
There is also far too much emphasis put on megapixels, particularly by sales people. Not many people need more than 8MP, except high end professionals shooting billboard ads.
An 8MP images from an SLR will trounce a 13MP image from a compact camera. The compact will generate a bigger file, but the quality of the pixels will not be as good as the SLR. Again, this is due to sensor size - there will be far less noise, better colour, higher dynamic range (the range of brightnesses captured in one scene) particularly at higher ISOs.
They also trick you with the numbers - 13MP sounds like it's much bigger than 8MP, but it's referring to the total number of pixels. In terms of width X height, it's not that much bigger!
Don't buy a camera based solely on the number of pixels. 8MP will give you A4 size easy. In most cases, trying to cram too many pixels onto a small sensor is counter productive, and will actually degrade the image quality.
John
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