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I have the Powershot SX100IS (8MP, not 10 otherwise same) and a Canon EOS 300D DSLR. Whilst the 100IS has a longer optical zoom and MP rating than the 300D, I wonder if it actually takes a better (or perhaps bigger) pic.
It depends on your needs and what you can afford. If you go with a DSLR, make SURE you get quality lenses because you can always replace the body relatively cheaply.
I notice in the most recent JB Hifi catalogue (picked up today), there is a Canon 1000D DSLR twin lens kit for $996.