I warn you now, my rather biased opinion in this matter -will- come out. So be prepared.
I was at a shoot at a day care center the other day. I was helping a guy get his start and was there to offer technical advice and lend some emotional support to a rookie trying to make his way. I got a helping hand when I got started, and I was just trying to carry on the tradition.
Towards the end of the shoot, he ran out of memory card space. Since I brought my stuff with me too, I offered the use of my cards. Turns out, his camera used SD cards and mine used CF cards. No problem. I put the same lens on my camera, dialed in the same settings that he was using in manual, and let him continue on.
In between groups of kids, he was looking through his shots and said the following. “OK. Why are these same shots so much better on your camera?”
“Because bigger is better,” I said with an evil grin.
My camera is a full frame rig and his was a cropped sensor camera. Simply put, the sensor in my camera is the same size as a 35mm piece of film is. There is far more cropped sensor cameras on the market than full frame sensors, by the way. His was 1.6 times smaller.
The above example photo was robbed off of DSLRfilm.com and gives you an idea of what this looks like for your camera. A cropped sensor camera seems to give you more reach and it tends to be appreciated by birding and wild life photographers, because they shoot things further away. So it makes a 400mm lens act like a 640mm lens on a 1.6 cropped camera. Cool right? The drawback is in the wide angle side. A 24mm wide angle lens acts like a 38mm lens. Not quite as wide angle as 24mm.
Portrait photographers tend to favor the aspects of full frame, because not only do our wide angle lenses act like wide angle lenses in situations like Bride rooms and such, but there is another bonus as well. DOF appears to be smaller. So this means we have more background blur for our portrait shots.
Also, as long as the Law of Physics don’t take a vacation, the larger the sensor is, the more superior image quality that “can” be produced because of the extra real estate on the sensor.
The bigger the sensor is, the more this seems to be apparent. This is why serious stock photographers, commercial photographers, and studio photographers that sell a lot of large prints, all tend to favor medium format cameras.
Bigger is better.
Now there also seems to be an unquantifiable visual quality when comparing images side by side from cropped sensor cameras to full frame sensor cameras. Many report that they can see a difference in the two shots when comparing apples to apples. Like what happened with my friend Doug. Same situation, same scene, same settings, same lens, same light. Nothing changed. The only difference was his brand new cropped frame sensor, and my aging and long in the tooth full frame sensor.
Now I am not advising that everyone run out and buy D700’s and 5D2 cameras. I advise you to stay in your budget. Anything else is silly. But when it comes time to upgrade, and if you have the cash – not credit -, and if you shoot a lot of portraits and people pics, strongly consider full frame if you can.