The truth is that today's P&S cameras are very good. They do a lot very well, and they're small, cheap, easy to carry, etc. So in a lot of situations, they're actually a very good choice.
A DSLR such as the 40D is meant to allow you to get even better shots than a P&S could give you for the same situation. But one of the big reasons you can get those better shots is by exercising more manual control over the various trade-offs so that you can stack the deck in favor of what's important to you in any given situation rather than having the camera make the decisions for you (often doing things that are not to your liking).
But in order to do better than the automation of a modern P&S, you really do need to have the experience and knowledge to do a better job than the P&S's built-in systems. And they're pretty good these days!
So a good way to think about this is to decide if you're interested in photography as a hobby, and if you're going to enjoy learning more about it and doing the experimentation and study required to get progressively better.
It really can be a lot of fun. And a camera like the 40D is great because it will allow you to explore all of this very well yet it does have fully automatic modes for times when you just want to see what the camera will do on its own.
Of course, you still have to exercise more control than you would with a P&S, because you've got lens choices that would not be available with the P&S.
Since you've already got the 40D, I'd tend to recommend that you stick with it and see if you don't end up enjoying it all. There is a LOT to learn. Most of us never stop learning, and hopefully, we enjoy every bit of it.
Don't imagine that everyone else just picks up a 40D or similar camera one day, and is then instantly able to get great shots with it. It does take some playing and learning to get the kind of results you want. A lot of the shots you may see and admire are made by people who have been doing this for many years.
Also, keep in mind that P&S cameras do a LOT of very heavy-handed processing of the images that they capture. This processing is done before you ever see the image. DSLRs, on the other hand, tend to NOT do much image processing because doing so in the camera limits your options for that shot greatly.
Thus, DSLRs generally leave the images fairly "bland-looking". They expect that DSLR shooters will do their own image processing later, so they leave the images largely alone so as not to take that control away from the photographer. Part of that processing is sharpening. P&Ss generally apply a LOT of sharpening to the images. You can do the same thing, but with more control, and at a better point in the image processing process, by doing it yourself later with your photo editing program.
Also, DSLRs punch up the contrast, apply autolevels, and crank up the saturation a lot. Again, you can do that all yourself later, and with greater finesse and control.
And one final thing to keep in mind is that P&Ss generally use very tiny sensors. As a result, you end up with deeper depth of field with DSLR shots than you typically get with a camera using a larger sensor. Sometimes that's a benefit, sometimes it's a drawback.
I don't see anything wrong with your example photo at the size that it's presented. And I suspect that even at a larger size, with proper sharpening applied at the end of the image processing, it would be fine.
As others have stated, the composition of the shot leaves room for improvement, but a P&S wouldn't help with that. I do this sometimes myself, and have to constantly remind myself NOT to center people's heads in the frame. Doing so cuts off their legs while capturing a lot of wasted "dead air" above their heads. Don't feel bad, we all do it in the heat of the moment at times, and particularly when we're concentrating on getting an autofocus "point" on someone's face.
I hope you decide to keep the 40D and just play with things and end up enjoying the journey of learning and playing that you will have with it.
But I understand what you're saying. The modern P&Ss do a pretty amazing job with all of their automated shooting and processing. You can do better with your 40D, but to do so is a good challenge!
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Jim H.
