I was deeply suspicious of this lens before I eventually got to play with one, and the one year wait for them to make it to the UK market did not help things.
Half an hour with it was enough to completely change my mind.
Traditionally speaking, camera manufacturers do not make lenses like this. Equivalent of 27-300 on 35mm film, ultra-zooms of this kind have always been the territory of independent manufacturers like Sigma and Tamron. In fact, until 2005 even the independents were not offering lenses with this much range. The reason is that any zoom lens is a compromise of size, weight, range, aperture and sharpness, and premium manufacturers were simply not prepared to make the quality trade-offs. The smaller format of DX sized digital sensors has changed the game somewhat, but Nikon have created a near miracle cramming fast silent-wave focussing, Vibration Reduction, a very reasonable f3.5-5.6 aperture, and a minimum focus distance of 50cm into a tube which weighs only 560g and measures just 77 x 96.5mm.
Given what it does, the 18-200 is extremely sharp and relatively distortion free. It performs considerably better, for example, than the old Nikon 70-300 G (not the new 70-300 VR), and is at least as sharp as my old 24-120, while being only marginally heavier.
The jewel in the crown, though, for this lens is Vibration Reduction (VR II), which effectively gives 4 stops reduction in shutter shake, which should you to effectively shoot unblurred shots at focal length 200 mm with a shutter speed of 1/15, or at focal length 18, with a shutter speed of 1 second. At 1 second f/3.5, this means you would get a sharp shot in near darkness -- something which could not even have been achieved with a 28 mm f/1.4 prime lens. In practice you need to take account of the fact that using a DX lens extends the effective focal length by a factor of 1.5, so you should be aiming to shoot at a slightly faster shutter speed than you would have done on film. Looked at either way, though, the results are nothing short of astonishing.
Who is this lens aimed at? It is clearly quite an expensive purchase. If you already have an 18-70 kit lens, then you can round out your outfit with a 70-300 VR lens for much less money, and the total weight would come to about the same. On the other hand, despite being astonishing for what it is, this is not a top professional lens. It can't give the creamy out-of-focus highlights of, say, the 70-200 f/2.8 lens, and it isn't as sharp. On the other hand, it is 1/3 of the weight of the 70-200 and 1/3 of the price. This is certainly a lens which can be used in a professional context -- in fact, it can replace all the lenses in your bag for many practical purposes. But it's also a delightful lens for amateurs, hobbyists, and people who just like taking pictures. It will work on any Nikon digital SLR, including the D40, and it focuses quickly and easily with little drain on the battery.
Unless you obsess about the absolute last pixel of sharpness, or need to keep your costs down, this is a superb lens which is unlikely to disappoint.
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Note on the hieroglyphics.
You may be wondering what G ED-IF AF-S DX VR Nikon F stands for.
G - this lens does not have an aperture ring, unlike older models. Aperture is controlled from the camera
ED - Extra-low dispersion glass, Nikon's premium. This lens has three ED elements which is one reason why it performs as well as it does.
IF - Internal Focusing. This means that the front of the lens does not turn when you focus, thereby not upsetting any filters you may have.
AF - Auto-focus
S - Silent Wave, Nikon's newest auto-focus, which is faster and quieter. The D40 only functions with Silent Wave lenses.
DX - Digital Exclusive. This lens will not function correctly on 35mm film cameras, such as the F5 or F6.
VR - Vibration Reduction
Nikon F - uses the Nikon F mount. In principle this camera should fit any Nikon from the last twenty or thirty years. However, being a DX lens it will only function properly on digital cameras.