WHAT'S HOT: One of the smallest, lightest 4-megapixel digital cameras available, the D-40 Zoom gives you the option of big enlargements for those once-in-a-lifetime shots, and yet it's still compact and light enough to carry along wherever you go. It's also relatively fast and easy to use. A single dial lets you switch from fully automatic to program priority, movie mode, or one of the five scene modes. Such shooting flexibility makes the D-40 a nice choice for advanced photographers as well as novices. For even more control over your exposures, the dial also includes a setting for aperture priority, shutter priority, or full manual (you pick which is active through the menus), plus a helpful My Mode for choosing and saving your favorite settings.

Olympus also packed in a slew of other controls common to higher-end cameras: panorama mode, spot metering, auto bracketing, and the ability to add audio notes to a shot--either when you take it, or anytime after.

WHAT'S NOT: After you push the zoom button, there's a momentary delay before the lens actually starts moving. The 16MB SmartMedia card seems a bit small for a 4-megapixel camera--especially given the recent drop in media prices. Olympus could do a better job with its documentation. The basic manual (in four languages) may raise more questions than it answers. For example, it provides almost no information on how the My Mode feature works. Instead, you must go to a fuller manual on CD-ROM. Not very convenient when you want to sit on your couch and learn all there is to know about your new camera.

WHAT ELSE: The D-40 is a nice-looking camera: It has a brushed-silver case and a sliding cover that protects the lens and flash. It's also relatively easy to use, though it tends to lean on its menu system for changing its many controls. But with the four-button thumb pad, the menus are fairly fast to work through, intuitive in their use of icons and text, and flexible--you can define shortcuts to functions you tend to use often. The few buttons are mostly well labeled. One does double duty to delete images and change flash modes. Another lets you switch between macro mode, spot metering, or a combination of the two.

The D-40 manual-focus mode works relatively well, though you have to read the instructions carefully to find it. When you hold the OK button down for a couple of seconds, a distance scale pops up in the LCD display. To help with accurate focusing, the image is magnified as you change the focus. Even with that aid, you're better off using the distance scale for anything other than close-ups. Finally, the D-40's manual focus mechanism seems very slow. All of this means you'll probably use manual focus only when you absolutely have to. Fortunately, the camera's auto-focus was generally fast and accurate in our tests. If it has difficulty, it's when you are shooting with a telephoto lens in very low light.

As with most other Olympus cameras, fine-tuning your exposures is simple enough. Using left and right thumb-pad buttons, you can move the exposure value (EV) up or down. In aperture-priority and shutter-priority modes, the color-coding tells you when your aperture and shutter values are out of range for the available light. One of the camera's more useful exposure controls is a one-touch white balance--you simply point the camera at a white object and push the OK button. It's much faster than trying to pick the right pre-set. Like most digital cameras today, the D-40 supports Digital Print Order Format (DPOF), but it's more robust than most--using the thumb-pad buttons, you can crop images right in the camera before sending them off to the printer.

In our imaging tests, the D-40 earned a score of Good, which is about average for digital cameras costing $500 or more that we've tested recently. Shots of our mannequin model revealed accurate exposure values, but we noticed a slight overall reddish cast--especially on the photos taken with a flash. Aside from that, colors were bright, with pleasing shadings. Our test-chart shots showed a nice range of gray scale and fine detail, but they also looked about one f-stop underexposed, making for slightly dull colors and whites. Radial patterns showed only minimal moire distortion; however, we did see some yellow banding in the blocks of fine black and white lines. Our outdoor shot on a bright sunny day was also slightly underexposed and showed some mottling in the pure blue sky. On the other hand, the shot did not have the all-over blue cast we see with so many digital cameras.

The D-40's battery life is surprisingly good, given that this camera uses either two AA batteries or a disposable lithium battery pack that comes in the box. We recorded an impressive 369 shots before the lithium version gave out. Another useful item in the bottom of the box: a handy wireless remote trigger.

The included Camedia image management application is adequate for downloading, viewing, printing, and adding minor fixes to your photos. The software bundle also includes Adobe Photoshop Elements, a very good image editor.

UPSHOT: As a high-end point-and-shoot model with an extensive selection of user options, the D-40 should appeal to those who take recording life's events fairly seriously.

SUMMARY

Olympus D-40 Zoom 4 megapixels, 2272 by 1704 maximum resolution, 35mm to 98mm focal range (35mm equivalent), f2.8 to f7.5 aperture range, shutter speeds from 16 seconds to 1/1000 second, optical and LCD viewfinders, USB and video connections, 16MB SmartMedia media, CR-3V disposable lithium or two AA batteries, 8.8 ounces with batteries; Olympus CamediaMaster software. One-year parts and labor warranty, toll-call support for 13 hours on weekdays. $599 800/622-6372 www.olympus.com