These days I'm working for Dick Lyon, one of the co-inventors of the Foveon sensor that Henry mentioned. Dick gave a series of talks about the constraints on imaging. Here's the first one: http://video.google.com/videoplay?docid=1995500334102318709 The sensor market is being pushed by suboptimal market forces a lot right now: cell phone makers buy insane numbers of chips and demand high pixel counts to list on their full color glossies. But it's very tricky to make a lens, especially to fit in a cell phone, that's sharp enough to resolve 1.8um^2 pixels. Then people try to use it with shaky hands with indoor lighting, and you don't get anywhere near the pixels you paid for. Electrical noise, shot noise and diffraction limiting are all significant sources of noise when you get serious about sensing, and bigger sensors help with all of those.