Well

Well, actually the S5 has a higher pixel count then the S3.
I think you have to put things into perspective though. I am not sure what competitor model offers better performance at this price point, but I have paid more for lenses (like my Tokina) that exhibit a lot worse fringing.
I have profiled it out and after I sold some images shot with this lens, I have not heard any complaints.
On the other hand, it is always good to avoid these kind of scenes (silhouettes in front of bright background). I can see why you think that it is unacceptable and at the very least it should have been mentioned in the review to help people make their decision.
I don't use this camera much, except when I don't plan to do any shooting but don't want to be caught without a camera in case the Marsians land. I guess it depends what kind of quality you can get with this zoom range for that price.
Nothing is free and you get what you pay for. It is much cheaper for Canon to drop a higher pixel count sensor and it will attract a lot more customers who are bedazzled by pixel numbers and don't understand fringing. So its a good marketing proposition.
On the other hand, a good lens is very expensive. Even the most expensive SLR is cheap in comparison to the most expensive lens. It costs a lot to manufacture those.
I would argue that you should buy a SLR and invest in some really good lenses. It doesn't have to be outrageously expensive if you stick to prime lenses.
You will get a number of advantages from this setup:
-Your pixels are larger and thus your images have less noise
-You can create a shallow depth of field, something hardly possible with a small sensor
-Your minimum aperture is larger (diffraction limits this on small sensors)
-You can invest a lot of money into lenses that you can keep for a long time while you replace/upgrade bodies.

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