IMO, to a large extent what you get moving up the price bracket is increased ease of use.
I have a relatively expensive SLR (at the time it was one from the top of the line) and I wouldn't want to move back down, although I'm sure that with extra effort I could still get most of the same results. What frustrates me about cheaper cameras is that you have to really work hard to change basic settings like white balance, ISO, focus, exposure compensation, even the zoom setting (although to be fair, I prefer my lenses like my bikes - fixed!)
This really disturbs me when I just want to be thinking about composition and clicking away.
However if you're willing to work at a compact camera and master it, you can certainly achieve some stunning shots. While there's no questioning the technical quality of a shot taken on a large format film camera, the dry technical merits of a photo are often the least important component (but people focus on them because for money alone, you can improve them - appeals to our society I think).
As an illustration, consider that you can find many breathtaking photos on the internet (at a resolution of under 1MP). Many of them I would prefer on the wall at that resolution to a technically exemplary large format exposure that lacks any power.
To a large extent, if you will use a compact camera more than a larger one, the fact that the larger one has better image quality is irrelevant. I'm going camera-less on my LEJOG because I don't want to haul around my kit...
