Hi Inkpad -
Any modern camera that is in good repair will be able to wonderful, high quality images under "ordinary" circumstances, ie, outside during the day, not-too-far / not-too-close / not-too-much-motion / etc.
What distinguishes the more costly cameras is that they extend the above limitations into less than optimal situations, eg,
- the light level is low,
- the color temperature is far from daylight,
- there are deep shadows that need to later be lifted in PS,
- you want to blur the foreground and background,
- you want to shoot fast-moving sports,
- you want to have the ability to use off-camera flash,
- you want to be able to shoot from either very close or very far away,
- you want to compose using an optical finder instead of hoping to see the rear LCD on the beach,
- you want to shoot in bad weather without worrying about the low light levels or that a few drops of precipitation is going to get inside your camera and kill it,
- etc.
With a little bit of planning and minor ancillary gear such as a couple of reflectors and a tripod, you can even get around many of the above limitations.
In my opinion and that of many other photographers, the limitation for most photo situations is rarely the equipment -- it's almost always the lack of experience of the photographer and lack of knowledge of simple work-arounds for the above limitations (eg, a close-up lens, a tripod to shoot in low light, shoot at the peak of action in sports, have someone hold an umbrella over your head if its raining, use a bedsheet as a temporary reflector to bounce light back into the subject's face, etc.).
HTH,
Tom
PS - As an example of what one can do with an inexpensive older camera, I've attached a snapshot that I took on a family vacation around 2007 with a little Fuji f470 that had to be a couple of years old at that time and probably didn't cost more than $100. I forget the exact number of megapixels, but it was probably only around 6 Mpix.
To see just how good the image quality is, don't just look at the down-rez'ed thumnail, but double click on it and view it at full, 1:1 resolution. As you can see, it has more than enough quality for almost any application.