Why is this such a hard picture for a digital camera?

I was playing around with a new Canon S2 IS camera, sitting on the couch reading through the manual, and taking pictures of things around the room, trying out this and that.

The camera manages to do pretty well taking pictures in ordinary room light without a flash. While trying to test out various exposure and light-metering settings, however, I turned the camera towards one side of the room with a big window...

I either got a completely washed-out, over-exposed view of the window if I wanted things inside the house to look good, or, if I got a properly exposed view of the window, showing details of light passing through the window shade, I'd get a very dark, under-exposed view of everything inside the house.





Now, I realize that the human eye has a wider range than any digital camera, but even taking that into account, I was surprised by this problem. To my eye, the contrast between the brightness of the window and the room lighting did not seem all that great. It was cloudy and gray outside, and there was some tree cover for the window, so it's not like I was contrasting room light to full sunlight landing on the window shade.

I quickly, and without great effort at seamlessness, composited two images at different exposures to show what, more or less, the scene looked like to my own eyes:



Even later in the day, when the sun was going down and the light outside was looking pretty damned dim and gray, what the camera would keep giving me was the very washed-out overexposed view of the window. I tried a different digital camera (a Panasonic DMC-FZ5), and while it seemed marginally better, the results weren't that great either, and certainly far off from how my human eyes saw the scene.

Do these cameras really have such a narrow functional range for differences in lighting? Is there perhaps artificially pumped-up contrast being applied? Is it a matter of spectral differences between sunlight and indoor lighting (halogen lamp in this case)? If so, is there some sort of filter that might reduce this kind of problem? Do more expensive digital cameras handle this kind of lighting better?

My main surprise about this photographic problem is how unchallenging such a scene looks to my eye. The differences in brightness simply don't appear that great to me.

Obviously the human eye has an iris to control the total amount of light striking the retina -- an aperture control. There's also rhodopsin (visual purple) which is secreted by the retina to improve light sensitivity in dark conditions.

Since I can take in this mixed lighting scene all at once, however, with my iris remaining at one single "aperture setting" for the whole scene, and since my eyes adjust to the scene much more quickly and easily than the effects of rhodopsin would allow, it therefore seems that not only is the exposure latitude, or dynamic range, of my retina much greater than a CCD imager, but that there's a strong optical illusion going on telling me that the light from the window isn't that much brighter than the light inside the room. (The optical illusion comes to mind where the same gray square is put on a white background, and then on a black background, and looks brighter against the black even though its real visual intensity doesn't change.)

I have to wonder if the individual rods each, at any given moment, have a very broad exposure latitude, or if these retinal cells are simply, and very quickly as my eye casually moves back and forth across such a scene, adjusting their gain in small clusters so as shift the bounds of a narrower exposure latitude into a more useful, detail-providing range.

If you look above, you'll see I brought it rhodopsin only for the purpose of discounting it as relevant here.

Just trying to be thorough.