Whats Canon Digi 4 ?
Yes I know it's on the Canon 50D, Ixus 100 etc but what is it ?
Is it software that allows the camera to produce a better LCD image ? or is it a Hardware change in the form of a new processor ?
In addition to the better LCD image what else does it do ?
The Digic IV is the Image processor, basically a little computer inside the camera. It takes the data from the sensor (via the buffer) and applies it's calculations to produce a picture, RAW jpeg etc. before writing all the data back to the buffer so it can be written to the memroy card.
It's probably the single most important component in your camera, and that's why manufacturers give them names.