Yesterday afternoon it was reported on cnet.net (and also discussed on The Online Photographer Blog) that Olympus is happy at a 12 Megapixel file size and will not be pushing development of larger sensors for their E-System cameras. Instead Olympus will concentrate in improving their sensors in other very important ways: "dynamic range, color reproduction, and a better ISO range for low-light shooting."
The camera-buying market has this unquenchable thirst for higher, and higher megapixel count when that is not necessarily as important as the other characteristics of a digital capture. Camera manufacturers know this, but I think to a large extent feel they have to perpetuate this "Megapixel Race" to satiate the market demands and not to be perceived inferior to their competitors.
We have recently upgraded to Canon 5DMKII cameras that make 21.1 Megapixel files (almost twice the size of the files from our previous cameras); and, while the added file size is definitely an advantage if an image needs to be cropped severely, the real improvements over the previous generation 5D are not the increased file size.
The new camera has the ability to shoot at the ludicrous ISO sensitivity setting of 25,600. Anyone that started shooting in the film days looks at that astronomic figure and can at mostly just manage a disbelieving chuckle. At that high end of the ISO range the images are only barely usable, but this sort of flexibility brings new opportunities to photojournalists who can now shoot when and where they have never been able before. This expanded range also makes high ISO shooting in more traditionally regarded high ISO settings like 800, 1600, 3200, (and maybe even 6400) a realistically possibility for non-reportage uses. At these ISO settings the new camera makes much cleaner and crisper files than the previous generation (which already made better high ISO images that high ISO color film, but that's a different discussion). (Greg gives us an example of a 6400 ISO file out of the 5DMKII - Fernando)
The 5DMKII also has much better color range than the previous cameras, simply put: there are more possible colors the camera can reproduce, and that means more color subtlety. The previous generation also improved on this, making waxy-looking flesh-tones a memory of digital captures past.
Increasing dynamic range (the range of values in brightness from darkest to brightest that a given digital sensor or piece of film can record) is to me where development needs to be. Aside from some forgotten and somewhat unloved cameras from Fuji (the S1Pro, S2Pro, and S5PRo), most manufacturers have avoided promising increased dynamic range. In this area most of the headway is currently made with digital post-production -- multiple exposures, CameraRaw manipulation, etc. The trend to push HRD (High Dynamic Range) techniques is proof of that many are fascinated by the prospect.
Larger file sizes also bring new problems to the working photographer. Where last year the studio generated almost 1.5TB worth of images and files, we can expect to double that or more in 2009 with the new cameras. More files mean a lot more storage needs to be devoted not just for archiving the image but also to keeping everything backed up. Larger file sizes immediately render one-year-old editing stations painfully slow. Larger file sizes make some previously good lenses seem less sharp -- yes, a large enough sensor can reveal imperfections in lenses that seemed optically perfect with film and smaller sensors.
Still, the megapixel count WILL go up. We should all consider which other features are more important instead, maybe manufacturers will devote more resources to developing in those areas instead of just increasing the file size.