Live View on a dSLR gives the ability to see your subject as your frame your shot on the screen on the back of the camera. This allows you to see your subject withouth using the small eyepiece. Most point and shoot cameras have this feature. Some do not even have the eyepiece and you must use the "TV" screen to line up your shot in real time.
The screen on the backs of the dSLRs have traditionally only been used to show information about camera settings or to review the picture after it has been taken. Due to how the dSLR works it has been harder to implement "Live View". Even now most dSLRs cannot match their point and shoot counterparts in the maturity of this feature.
I find it pretty natural to use the eyepiece and do not think I would miss the omission of the Live View feature on a dSLR. My only consideration was to my wifes use of glasses and her sharing of my camera. A Live view feature would subvert the need to adjust the diopter on the eyepiece when switching the camera between us. If you are one who thinks this more important in your selection you might find the information below helpful.
While examining the Canon XS ans XSi in store I could not figure out how to activate "Live View". After reading the comments from Steve's below I understand why. Looks like this may not be the model for you if you do not like to use the eyepiece.
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..........The usefulness of Live View on the Rebel XS (and XSi for that matter) is something that I could not find. Not only is it difficult to engage when compared to say the Sony A300/A350, but its at least a three step process to capture a single image. In my opinion, Sony is the only manufacture that has got this Live View concept down. On the Sony DSLR-A350 and DSLR-A300, you simply flip a switch that says Live View, and you're on your way. And because they use a separate CCD imager for the Live image that is displayed on the LCD, you don't have to wait for the mirror to move several times. On top of this, the A350 has an articulating LCD, which makes Live View actually usable for shooting over crowds, from the waist, etc. To activate this function on the Rebel XS, you first have to enter the menu and enable it. Then, you press the SET button on the 4-way controller to enter into Live View mode. Once you have framed your shot, next you have to press the AE lock/FE lock/Index button, then the camera will start to focus (pressing the shutter release half-way does nothing). Depending on the AF mode chosen via the Custom Function menu, the screen will go blank as the camera moves the mirror once again to achieve focus. The only exception to this is when using Live mode AF. So, when using Quick mode AF (which utilizes the 7-point AF system), I counted a total of 4 times that the mirror moved! As I stated earlier, I really don't see a use for this feature on the XS. While I feel it's a great camera, if you are one who plans on using Live View often, I suggest looking into some of Sony's dSLR models instead. ....
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Full Review
http://www.steves-digicams.
On the Olympus 420 and 520, I found it easier to activate live view . But I did notice the shutter seemed to click twice (instead of once) for every picture in live view.
The Nikons do not offer live view on their cameras unless you go D90 or better.