I think it's inevitable that cameras will get smaller as digital technology improves. And one of the camera manufacturers (perhaps Canon) will introduce a small digital SLR that takes much smaller lenses. I can't imagine that we will forever be using digital cameras with EOS D60-sized sensors. Nor can I imagine that sensors on Canon's consumer cameras, if they ever reach 24x36, will forever remain that way.
If I could buy the equivalent (in focal length, allowing for the smaller sensor, and in optical quality) of a 600mm f/4 lens (or longer) that would be light and easy to carry on a hike, I'd be very interested in buying one, and I'd jump ship in a heartbeat to whichever manufacturer made it, if the price were right. When digital sensors achieve very high resolutions (not yet, but relatively soon), this will be possible.
Not knowing a whole lot about optics, I'd say you're probably right, but I can imagine there is one problem with smaller sensors: You need higher resolution lenses and you get to a point, probably, where the physical limitations of glass is going to stop you or glass with higher resolution is going to be too expensive to use. Also, I'm sure higher resolution lenses in general will be more expensive to produce because of the increased precision they will need. That's what I'm speculating about anyway. If I understand right, the resolution of medium and large format lenses is less than those for small format, but large format still gives superior results because the lack of resolution in the lens is compensated for by a larger exposure area.
-- - Marius
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