(FORTUNE Magazine) – It's time for the family picnic--time to do your duty. While everyone else is eating, drinking, and generally having a great time, you take photos. On Monday you drop the film at the drugstore; on Wednesday you ransom the prints for ten bucks. When you get home, you find the usual run of luck--three or four decent pictures, a group portrait that makes half the family look like refugees from a zombie jamboree, and a dozen shots that are too dark, too light, out of focus, or simply awful.

Naturally your wife wants a dozen copies of the family portrait for the relatives, so it's back to the drugstore, wait a few more days, pick up the prints--and by the way, she forgot Cousin Andrea, so would you mind getting another print made?

If that sounds all too familiar, think about going digital. With a digital camera, you can snap a photo of Aunt Becky and a few seconds later look at what you've captured. If it's a good shot, Becky thinks you're a genius; if it's a stinker, erase it and take another. By the time you get home, you know you have 20 good photos in the can. Two hours later you've e-mailed them to the appropriate relatives, posted the day's work in a family album on the Web, and cranked out glossy prints on your inkjet for the poor relations who don't have a Net connection.

Nowadays none of this is particularly hard to do. That's one reason digital photography is poised to explode, with the Web as its medium of exchange. The big news this year isn't about gadgets, but about zapping photos around the world in seconds and sharing them online. That's the reason to go digital. If you're an old-fashioned shutterbug, you'll be amazed at how easy it all is, whether you're converting images to e-photos or ordering prints online. Sure, you can put a big dent in the charge card by ordering fancy equipment. But if you already log on to the Net to check e-mail or browse the Web, you have everything you need to get started.

For the hardware-happy, digital cameras are getting better and cheaper every month: You can buy a starter model for as little as $100, and a great one for $600 to $800. But it's easy to go digital without a new camera. For as little as $100, you can buy a scanner that will turn regular photos into digital images. You can even get started with no hardware at all: For fees ranging from $4 to $6, Kodak, Ritz, Wal-Mart, Eckerd, PhotoWorks, J.C. Penney, Wolf Camera, Mystic Color Labs, and other big outfits will post your images on a password-protected Website, where you can download them to your PC, share them with friends or family, and order reprints (as well as knickknacks such as photo mouse pads and coffee mugs). For casual snapshot takers, that's far more cost effective than buying a gadget you'll rarely use.

So how exactly does digital photography work? Basically, it substitutes electronics for film. Instead of exposing tiny grains of silver halide on a negative or print, a digital camera breaks the image into a matrix of dots that can be represented as ones and zeros on your computer. A scanner simply takes a digital picture of a photograph or document.

Once they're transferred to your computer, digital photo files are stored on your hard disk, just like a Microsoft Word document. Photo-editing software that comes with a scanner or a camera turns your PC into a darkroom--minus the smelly chemicals. You can crop, lighten, or darken your photo, make it larger or smaller, adjust the color balance, and get rid of the red-eye that turned your gorgeous children into creatures from a Stephen King novel. You can even wipe out those gray streaks in your hair, and little Johnny's acne to boot.

You can also easily make your own prints on today's inkjets, which produce images that rival a photofinisher's. (Technologies such as dye-sublimation printers make superb reproductions affordable.) Do-it-yourself prints cost 25 to 50 cents for a snapshot-sized image on photo-quality paper, but you're printing only the photos you really want--you don't get charged for cut-off heads and those inadvertent shots of the floor and ceiling.

With inexpensive desktop publishing and graphics software, you can use the photo in a flier, a brochure, or the company newsletter. If you're feeling creative, buy the right specialty paper and turn it into a greeting card, a calendar, an ID badge, even a refrigerator magnet.

But why stick to dead trees? The great thing about digital photography is that it integrates the old world of paper with the new world of electronics. Once you've captured your daughter in her starring role as First Snowflake, send the shot to Grandma as an e-mail attachment that she can view moments later. You can post it on your own Web page or, if you're not that wired, sign up with one of dozens of new Websites that make it easy to create online albums for the world to admire. If your friends or relatives like a picture, they can download it or order their own prints, which saves you time, hassle, and money.

A couple of caveats: While affordable digital cameras have improved remarkably, they can't deliver the quality of a decent film camera. For sports and other situations that require stop-motion photography, they're definitely below par. They also have limited storage capacity. When you run out of film with a standard camera, on the other hand, you can buy another roll almost anywhere.

Also, consider the longevity of your memories. Photographic negatives have a remarkably long lifespan--archivists still make prints from glass plates more than a century old. The inks used in today's printers haven't been tested over time. Also, while the ones and zeros of digital images never die or fade, the disks they're stored on can crash or degenerate, and the software that created them is likely to be replaced over the years. If you're not careful about backing up your images and keeping your software current, you could lose your digital photo album.

That may be why, according to an International Data Corp. survey, 93% of digital photographers still use film cameras too. At important occasions, you may want both types--you can enjoy the flexibility and speed of digital photography today, knowing that conventional negatives will also be there when your grandchildren want to see what life looked like in the old days.

DIGITAL CAMERAS

A digital camera captures an image on a grid of light-sensitive dots known as a charge-coupled device, or CCD. The camera stores brightness and color information for each dot on an internal memory card or floppy disk, depending on the camera's design.

There are some basic things to look for when shopping for a digital camera. First, buy one that has a liquid-crystal display on the back so that you can review your images and try again if you goofed. That's a major advantage over film. If you plan to do a lot of action photography, look for "burst mode" technology. Digital cameras take several seconds to process each shot once you click; without burst mode, you can't record a quick sequence of photos. Most cameras transfer your pictures to a PC via a cable that hooks up to the computer's serial or USB ports--USB delivers the data much faster. And consider some of the new cameras from Epson, Hewlett-Packard, Polaroid, and other manufacturers. They dispense with the PC altogether, letting you connect the camera directly to a printer.

Here are the other features to look for:

Resolution. This is what you pay for--the number of dots in each picture. More dots mean more clarity and better detail, particularly when it comes to prints. Some manufacturers express it as the dimension of the image, such as 1,024 by 768 dots. Resolution is also advertised in megapixels, which you get by multiplying the two dimensions. For example, a 1,600- by 1,200-dot image contains 1,920,000 dots, or roughly 1.9 megapixels. For casual Web photos, which have to fit within the confines of your monitor screen, an inexpensive camera that records 640- by 480-pixel images is fine. For acceptable four-by-five prints, you'll need a camera in the one-megapixel range, but if you can afford it, buy a two-megapixel camera. They run between $500 and $1,000 but provide the closest quality match to a film camera.

Optics. You'll get the most flexibility from a three-to-one zoom lens, which can handle anything from landscapes to tight portraits. Just be sure the advertised zoom ratio is "optical," which means the lens itself provides the magnification. "Digital" zooms use software to blow up small pixels into larger ones and aren't as sharp. Many cameras offer a combination of the two, giving you extra pulling power in a pinch.

Storage. The best digital camera is nothing more than a paperweight if you run out of "film." When you're shopping, find out how many images your candidate can store at each resolution. Be warned: A camera that stores more than 100 images at low resolution may have room for just a dozen at higher resolutions. Better cameras let you address that by increasing storage with industry-standard CompactFlash or SmartMedia memory cards. If you fill one card, you can replace it with another. Sony's popular Mavica line uses standard floppy disks. They don't hold many images but they're so cheap that you can carry a pocketful wherever you go. Sony's upscale cameras use proprietary Memory Stick cartridges, which store more but also cost more, and work only with Sony products.

Light sensitivity. By trying different types of film, a traditional photographer can make good pictures under a wide range of conditions. Good digital cameras allow you to adjust their sensitivity to light, but they don't all shine when the light is dim. Check the camera's ISO speed rating (the same standard of light sensitivity used for film). Inexpensive units may have an ISO of only 100, which is fine for daylight or close-in flash work. But for good indoor photos and better flash results, look for a maximum ISO of at least 400.

Manual controls. Serious photographers often override automated camera settings in difficult lighting conditions or in order to produce special effects. Digital cameras all focus automatically, but the better ones give you control over shutter speed, aperture, and focus, like a good film camera. The more you pay, the more control you get.

Flash. Like their film counterparts, most consumer-oriented digital cameras come with fairly anemic flashes. For large indoor group shots, portraits, and action-stopping power, a brighter external flash may be necessary, but not all cameras can accommodate one. Look for a camera with a top-mounted hot shoe or better yet, an industry-standard flash cord connection.

Here are five terrific digital cameras to suit different tastes and pocketbooks. Yes, we know there are other great cameras out there--so don't write to complain if we didn't pick yours. These are just suggestions; shop around and find one that's right for you. The prices are the medians we found during Internet-shopping comparisons.

Sony Mavica MVC-FD88

Sony's Mavica line is popular with consumers because it stores photos on floppy disks, which everyone understands how to use. This model's 1.2-megapixel resolution is a bit skimpy for the price ($750) but makes up for it with a superb eight-to-one zoom lens, nine preprogrammed exposure ranges, voice annotation, and the ability to capture a minute of full-motion video.

Epson Photo PC 850z

One of the best midpriced cameras we've ever used, the Photo PC ($700) is larger than many of its competitors, but it looks and feels like a standard SLR camera. It captures superb 1.9-megapixel images with a three-to-one zoom lens and makes it easy to switch resolution with the touch of a button. Serious photographers will love its full exposure, color balance, focus controls, and the hot shoe for an external flash.

Canon PowerShot S10

Unlike its bulky competitors, the slick S10 ($600) slips easily into a jacket pocket--but you don't give up much besides weight. It records sharp, 1.9-megapixel images with a two-to-one zoom lens and hooks up to your PC through a serial or USB port. Downside: no external flash connector.

HP PhotoSmart C200

At $300, the C200 is a solid beginner's camera, offering full one-megapixel images and a digital two-to-one zoom, unusual in this price range, along with an LCD screen, optical viewfinder, and video output. Don't expect the quality you'll get from more expensive models, but for Web photos and small snapshots, it's a smart choice that won't break the bank.

on a budget?

UMAX AstraCam

This futuristic snapshooter ($200) takes its cue from the Palm, using a docking station to transfer images to your computer and charge its batteries. With a fixed-focus lens and 640- by 480-pixel resolution, it's best suited for Web photography; that said, it has a 46-image capacity and lets you add voice annotations to your photos. CreativeLabs Video Blaster WebCam Go

When this inexpensive accessory ($150) is hooked to your PC, you can use it for real-time video capture or videoconferencing. Unhook it and you have a competent little still camera (90-image capacity at 640-by-480 resolution). It's great for folks who try video and still photography but don't want to spend a bundle.

SCANNERS AND PRINTERS

Scanners have become so cheap and easy that almost 20% of PC households have them. If you don't want to invest in a digital camera, a scanner can digitize your standard prints so that you can post them on the Web, send them as e-mail attachments, or use them in word-processing, graphics, or desktop-publishing programs. Scanners can also double as copiers and outbound fax machines, which makes them great tools for the home office.

How they work: Flatbed scanners look and function like copiers. You put your photo or document face down on a glass screen, and a scanning head passes beneath it. It breaks up your photo into dots and transfers the digital image to your computer through a parallel or USB port. Sheet-fed scanners use rollers to pass your photo or document over a stationary scanning head. Flatbed scanners are better for photos.

Resolution. Scanners measure resolution in the number of dots they record for each inch of your photograph. Even scanners in the $100 to $150 range can record 600 dots per inch, which means a four-by-five print will be recorded as a 2,400- by 3,000-dot image. When you consider that a good digital camera records a 1,200- by 1,600-dot image, you'll see that scanners can provide much better detail--assuming your print is a decent one. While many scanners offer resolution higher than 600 DPI, you don't need it unless you want to enlarge small areas of a larger photo.

Color depth. This is the number of "bits" (a digital one or zero) a scanner uses to record color information for each dot. Our eyes can distinguish 16 million colors, and it takes 24 bits of information to record all the possible color values. So a 24-bit scanner can record anything your eye can see. Better scanners use 30 or 36 bits--the extra information helps bring out shadow detail.

Sensor type. Most scanners use a charge-coupled device to record images, the same technology that's in digital cameras. But some new models use a contact image sensor, which is lighter and allows for smaller scanners with fewer moving parts. CIS scanners are getting better every day, but for now a CCD will produce more accurate images.

Convenience. The latest scanners have top-mounted buttons that automatically start a scan and bring up the right software for photos, faxes, or copies of paper documents. If you plan to use your scanner as a multifunction gadget, the "one-touch" features can make your life easier.

Visioneer OneTouch 8600

With top-mounted buttons for scanning, faxing, copying, and sending e-mail, the OneTouch 8600 ($240) makes it a snap to digitize photos and documents. The 600- by 1,200-DPI resolution and 36-bit color depth assure sharp, clear images--and the USB and parallel port connections provide hookups for any Windows-based PC.

Canon FB 630U

For $100, it's hard to go wrong with this sleek little number. The 600- by 1,200-DPI resolution and 36-bit color depth put it in a league with a lot of pricier scanners. Its USB connector works with PCs and Macs; if your PC doesn't support USB, try Canon's older FB 620P (it hooks up to your printer port).

Sony UP-DP10

Using dye-sublimination technology and specially coated paper, Sony's UP-DP10 Digital Home Printer ($389) produces borderless, laminated four-by-six prints that are virtually dot-free. It's a one-trick pony, but if you're serious about printing your own snapshots, it's a great trick.

THE WEB

If there's one big difference between digital photography a year ago and digital photography today, it's the emergence of the Internet as a medium for viewing, exchanging, and ordering photos.

At last count, more than 100 Websites were devoted to photo sharing; almost all of them are free. They allow you to upload digital photographs from your PC and create online albums with shots of your family, friends, church, school, or Little League team.

Here are some of the best:

ClubPhoto (clubphoto.com) is a well-organized site that lets you customize an online photo album. You can also have photos emblazoned on cookies and chocolate bars, and there's a utility that downloads online albums into Palm handheld computers.

Zing (zing.com) is slick and friendly. A browser plug-in makes it easy to upload multiple photos, which can be tedious at many other sites. Zing will also allow you to make multiple prints from a single shot on your home printer.

Shutterfly (shutterfly.com), a new site backed by Netscape co-founder Jim Clark, helps you produce great prints from your digital images. Look for specials and freebies.

Ofoto (ofoto.com) delivers free film processing and good utilities for removing red-eye and handling other minor touch- ups, and makes it simple to set up an online album.

PhotoIsland (photoisland.com) offers great tools for having fun with your photos--you can turn yourself into a beauty queen, make your boss into a chimpanzee, and otherwise twist, warp, mash, and mangle your pictures. You can happily waste a lot of time here.