I'm writing a response right now... I consider myself an expert on the matter since in a graphic designer. Please stand by...
A picture is worth a thousand words, so I'll start here:
35mm SLR (scanned in negitive):
Sony Digital camera (3.3MP S70):
As you can see the digital camera has more detail, has truer color is sharper and has less film grain. Even in printed form the digital looks better (Walgreen's developed 35mm vs Epson Photo printer).
Digital is the only way to go, if your posting pictures. Each time you add a generation you lose detail. The digital camera is only a second generation of the original and the 35mm would be a third generation. And film does not handle high-lights and shadows as well as digital.
www.dpreview.com is my favorite website for comparing digital camera. They have a very in depth review and have sample high-res pictures from each camera, so you can compare the quality. You can get a really good camera for $400-$500. There are 2 additional costs you need to think about. One is extra batteries and the other is a larger storage device (memory stick, compact flash, etc...)
I'd stick with the top brands to be safe:
Canon
Sony
Nikon
Fuji film
Minolta
OLYMPUS
Also, a good scanner will set you back more than a $1000. The cheap $100 scanners for sure will be worse quality than digital. When shopping for scanners don't get to suckered in high resolution. That is not the only number to look at. The dynamic range is very, very important also. This range measures how much detail will be captured within the highlights and shadows. The range is from 0 to 4 and a Good professional Epson $1200 scanner is rated at 3.6. If the scanners literature does not tell you the scanner dynamic range with it is very low and will produce poor scans. I used to work with a $50,000 drum scanner and it produced a 3.8 range.