One of the biggest issues is high contrast pix....black dog in any
lighting situation ends up a black blob in an otherwise nice scene.
This is an issue with all cameras, digital and film, point and shoot, prosumer and DSLR. It's simply a limitation of the technology. That said, there are some things you can do to make your shot come out more to your liking, but all require a little thought and effort on your part. Remember, any camera is simply a tool and will only work as well as the person using it.
Try a little flash. Even if there is plenty of light, some fill flash will help to give the black blob some highlight definition and turn it into an actual dog. This is probably the easiest thing to try.
Use exposure compensation. The camera may be exposing the rest of the scene well, but the dog is (for all practical purposes) underexposed. Try adding +1 exposure compensation to trick the camera into over exposing the whole scene. The background may be too bright, but the dog will be better exposed.
Spot meter right on the dog itself. The default in the V1 (and V3, and most other cameras) is multi segment metering. The camera evaluates the whole scene. Instead, tell the camera to expose for the dog by selecting spot metering. The rest of your scene will be over exposed, but the dog will look much better.
Use Photoshop (or similar program) to brighten the dog but not the rest of the scene. This probably requires the most work, but offers the best control and potentially the best results.
Is there a high quality replacement that would work very well
overall in an auto mode? I only shoot a couple times a month, so I
can;t memorize all the custom features.
No camera knows how to deal with every scene it will ever encounter, so you have to use your skill and judgement in order to make the image what you want of it. If you are only willing to rely on the camera's fully automatic modes, then you must be content to have a percentage of shots turn out less than ideal.
This is why photography is an art and requires practice and effort.
I need indoor and outdoor performance with 4x zoom and good recycle
and focus times. Not looking for the $300 camera as this is a
business tool so more cost is not a big concern.
Is the V3 improved?
I find the V3 to be a great camera. For its type, it recycles fast and has quick shot-to-shot times. However, if performance is vital, you may want to consider an entry level DSLR. They will always out-perform an advanced compact in terms of speed and flexibility. However, if a balance of compact size and great performance is most important, the V3 is hard to beat.
Not sure, though, if you should give up the V1 for a V3 considering your ocational needs. You should get great results with the V1.
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A camera is just a tool - no matter how much one loves it.