I use the Canon S90....and get good results with my Swaro 80. I have also used the Fuji 30 as suggested here but feel that technology of 2006 has been surpassed by the Canon or similar units in the PS category now.
A few things that have improved since the Fuji 30 days. First, the fuji has no histogram. This is a huge loss and I found that by moving to the S90, I have much better shots as I have the histogram to guide me.
Second,...the Canon has a magnifier when you press the shutter down half way. This allows the spot I want focused to be magnified allowing me to further focus from a close up point of view. I find this really important in overall image quality for digiscoping.
Digiscoping is cumbersome.... When I use a camera such as a 40D plus lens....it is heavier and the more weight you have on the back of the scope, the more cumbersome it is to take a shot and frankly, I don't think images done with a camera plus 50mm lens is any better.
Images vs digiscoping can look super when compared to cameras and lens set up (non-digiscoping). But, noise is an issue and you will find that when viewing at 100%, the camera will win out every time. But if you are looking for 4 x 6 type photos or even viewing on the web, the digiscope is equal in those cases. Digiscoping is not designed to sell photos with super high quality as a camera plus lens...so realize that ahead of time.
Frames per Second....is one of the only advantages I see in a camera such as a 40 or 50d or even the 7D... For example, my Canon 40 D plus lens as a fps of 5-7 pics per second while the Canon S90 is more like 1.5 .... For birding that is a huge issue.
But....one intangible that comes into play is that when digiscoping, I find I do more 'birding' as I really have to pay attention to the bird, follow it...predict movement of bird etc.... unlike a camera where I just find a bird and start clicking away with the rapid FPS and eventually come up with a good photo. Again, this is intangible and something I take into account.
Digiscoping is not for fast or hyper birds. It is not for birding where you are trying to find a lot of different birds so if you are in a birding hotspot like Ecuador or costa rica etc...stick with a camera and forget the digiscoping as you will be disappointed.
I have also tried the canon SD1200 series ...which is now SD 1400 I believe. Those work too and are a good investment for only $160 or so.... The S95 now sells for close to $400. But quality is better....