The current hot market for photo printers is a direct result of how popular digital photography has become. As digital cameras gained popularity, users began to realize that the quality of output they were experiencing with standard color printers was just not anywhere near as good as that of prints from even a single-use conventional film camera. There are several reasons for that, reasons that vendors have addressed in the current crop of specialized printers targeted at the digital camera user.
One of the major differences is that traditional film is an analog medium and most computer printers are digital. When you take a picture with a camera, the light activates dyes in the negative, which form a continuous tone image. The actual shades of color and black are small enough to blend smoothly into one another. Digital images, on the other hand, are generally made up of dots of color and black, similar to the half-tone process used in printing pictures in newspapers, books, and magazines.
Photo printers address this in several ways. If they are inkjet printers, which form the image from dots of colored ink, they use extra colors in the print process, called photo inks, smaller-than-usual dots that blend better, and special printer driver software that produces images with little or no visible patterns, called dither patterns.
Other photo printers use a dye-sublimation process to produce an image that's almost the same continuous tone as a real photograph. And at least one printer actually uses instant film to "print" a photograph.
First decide whether you will need to use the printer only for printing photographs, or if you'll also want to use it as a standard printer to print reports and other projects. If this is the case, you'll want an inkjet printer--either a standard inkjet printer with a photo ink cartridge set or one of the new photo inkjets that add features such as the ability to print directly from a digital camera or from the camera's memory card.
If you won't want or need to use the printer for standard print jobs, consider a specialized photo-only printer. Generally, these produce near or actual continuous-tone prints using photographic or dye-sublimation methods. They are also likely to offer a smaller photo-size print format. As with the specialized inkjet photo printers, these smaller-format printer generally let you print directly from the camera or memory card, as long as your camera and printer are compatible.