Nature photography in general requires big lens capabilities.
You have two ways to go, 35 mm or digital - which includes digiscoping of course - which is dealt with elsewhere in the site.
I still think 35 mm gives better results quality wise. Digital is getting there but the high end cameras are the only ones that truly compete and they are out of my league at least.
With 35 mm, the camera body isn't critical in terms of needing the top model, but the lens has to be good. A lot of 35 mm equipment can be picked up quite cheaply nowadays, but you are still faced with high processing costs.
Digital is an ideal media for bird photography. You may take thirty or forty shots but only keep a couple, just deleting the rest. The problem area is the quality of those captured shots. The 2 - 3 mp cameras don't really cut it for me, the image quality is just not high enough. Don't get me wrong, you can take excellent shots with such cameras, but they still don't compete with a 5 or 6 mp camera.
I went for a budget approach to my birding photography. I use an Olympus C2100UZ, a 2.1 mp camera with a 10x optical zoom. The big zoom really helps, but sadly the camera is no longer available. The Canon Pro 90IS (also discontinued) had pretty much the same spec. sharing the same lens and Image Stabiliser but with a slightly larger CCD, I think it was 2.65 mp, but I could be wrong. The subsequent Olympus cameras have increased memory but shorter zooms, though I think the C740 has a 10x optical zoom. None now have the Image Stabiliser which makes such a big difference enabling hand holding. The Sony 707 and now 717 seems to give excellent results from what I've seen, but again the price goes up.
In terms of reach of the lens, the Olympus C2100UZ equates to around 380mm in terms of 35 mm photography, pretty handy in itself, but never quite enough unless you can creep up real close on the birds! In addition I use two Olympus tele-extender lenses coupled together, the B300 (1.7x) and Tcon 14 (1.45x). They work like the 35 mm tele-converter lenses, except they screw into the camera filter thread. Someone calculated they boost the length to over 1000 mm, but actual figures like that never really interested me. Using the B300 alone gives very little loss of image quality and only very slight loss when coupled with the Tcon14. In addition there is next to no loss of light entering the camera so exposure isn't greatly affected. The set up suits me fine for ease of use and manoeuvrability, useful in following the birds around. I have even coupled two Tcon14's to use with the B300, for those really distant birds, but to be truthful I only regard the quality as being suitable for a record shot.
Best of all are the true digital SLR's such as the Canon D30 and especially the Canon D60, which allow use of all the big lenses. The results from these cameras are outstanding, out performing even 35mm. I wish the trade had gone down that course right from day one. Each manufacturer could have produced digital SLR's with interchangeable lenses, but of course would have made far less money. The downside is that unless you have really deep pockets, you can only dream
Sorry at the length of the reply, I got a little carried away !