As many people know the digital camera market is hot with the "2 megapixel buzz", and many were surprised that Kodak didn't jump on the same bandwagon when releasing the the DC265, however it may be noted that Kodak only changed the last digit indicating an upgrade and not a complete new camera (maybe there's something in the wings).
That said the DC265 goes on to prove that it can still stand its ground with the new boys. With its 1.6 Megapixel CCD (1536 x 1024) it has exactly the same resolution as the Canon Pro 70, and if the differing aspect ratio is taken into account (3:2 same as 35mm film vs. 4:3 as used in many other digital cameras) the newer 2 megapixel cameras only offer an extra 4% horizontal resolution over the DC265 (however overall resolution is some 22% more).
Probably one of the most distinguising features of the DC265 it uses the Digita operating system onboard which allows owners to upload (place on CF cards) scripts which extend and enhance the cameras functionality. There's even a website dedicated to such scripts: www.digitacamera.com
One thing which DC260 owners pined over was an uncompressed mode, on reason could be seen not to offer this facility and it was seen as a major enhancement, the DC265 arrived on the scene and many a rumour abound, however the DC265 does not yet offer a complete uncompressed mode. It does bring a new "Super Quality" mode but this is still JPEG and still lossy compressed.