While doing my research on the Leica M9 I also spent some time looking at what the current state of art is in the DSLR market and one of the topics is sensor noise. I've been hearing all the talks about amazingly high ISO settings offered by the current crop of DSLRs, something that originated from the high end full-frame models and now trickled down to the mid and entry-level models.
Although I'm sure that there are always fundamental improvements being made in sensor technology that increases the signal-to-noise ratio, but on the other hand I think camera makers are to some degrees exaggerating the high ISO performance claims (for marketing purpose?).
At ISO800, despite seemingly noisier the Pentax K7 image is more contrasty and retains the detailed texture better. But when pushed further it becomes obvious that it's fundamentally noisier than the others as can be seen from the ISO1600 shots, which show similar levels of details yet the K7 image has visibly more noise. From ISO1600 onwards, the so called high ISO performance is simply a matter of in-camera post-processing (either by the firmware or on-sensor) algorithms that blur the images more and more to average out the noise. The images are definitely usable for web or smaller prints but it's clear that the extra ISO settings come at the expense of resolution. For people who used to do their own RAW processing I think similar results can be achieved by pushing underexposed, lower ISO shots and applying noise-reduction in software (in which one can have a lot of flexibility in terms of algorithms and parameters).
The wider range of high ISO settings is certainly a convenience for JPG shooters. But realistically the increase of max selectable ISO from say 1600 to 12800 (3 stops) doesn't really correspond to a true 3 stops improvement of fundamental noise performance in the sensor. What's really happening is a smaller fundamental improvement (of say up to 1 stop) coupled with in-camera post-processing that stretches the max. selectable ISO with a trade-off in resolution.
The race of mega-pixels is over and the new race of high ISOs has begun. Canon has even backed off a bit in the MP race with the G11 and shifted some focus to high ISO, which indeed does make some sense because of the tiny sensors in the Gs. Nikon is also doing something similar in their D700 and D3 models (which have relatively lower resolutions but max ISOs so high that I've lost count). Sensor resolution has fallen behind the Moore's law and light sensitivity is getting more difficult to boost as we get closer to limitations and complexity at the quantum level. Camera makers have to play a tougher and tougher game of balancing resolution and noise.
As always, interesting time ahead.