I can't decide between the canon powershot and the canon rebel digital camera. Is there a big difference?

Let's just say that there is a HUGE difference. If there was nothing else to compare, simply the size of the sensor would make enough difference to say it is worth the upgrade to the rebel.

Here is a mini-tutorial I made myself to compare 10 MP sensors in a digital SLR (DSLR) and a point and shoot (P&S) camera. I have tried to keep everything on equal footing with no unequal cropping of the original images. Both images were taken at the equivalent of 75 mm from about 1,000 feet away. View this FULL SIZE and scroll through the image to compare the resolution at various points of the images. To me, the P&S sensor practically looks like an impressionist painting compared to the DSLR sensor. Please note also that this is the "large size" P&S sensor, as most are using the smaller 1/2.5" (5x4 mm) sensor.

[Yahoo! is not letting me post my link, so I will try to show it as my source below.]

Besides that, with the Rebel SLR you would have an immense catalog of lenses for any purpose you could imagine available to you. With a Powershot anything, once you buy the camera, you have pretty much determined your lens option for the life of that camera. I mean, there are some add-on lenses, but they are nothing compared to "real" lenses that you can use on the Rebel.

powershot is the point and shoot camera series. rebel is DSLR.

A DSLR will be more rewarding, easier to grip & outlast the point & shoot.
Regardless of what you get buy an extended warranty & wear the thing out having fun.
DSLR Lenses & flash will cost extra. $$$$
If you want to play you'll prob have to pay big $$ when it comes to DSLR's.
In a couple of short years it will be out of date & a few other photographers will be shooting double the megapixel strapped to your neck & you'll feel like telling your friends where to go.
I watched waited for the prices to drop & for quality to go up. I'm shootin a very durable semi-pro CN 8.0 megapixel camera body.
The lens prices went up really nasty when everything turned digital from 35mm.
Convenience if you dont want to haul around a heavy bag & pay for extra lenses, get the all in one.
I have a small pop shooter camera that is a blast to strap around the neck all the time & it even takes great properly exposed macros for something the size of a cigarette pack lol.
If you think you'll turn into a x-mas monster that feels like screaming your lungs out at anyone & everyone thinking about touching your camera stuff. Buy the smaller camera. lol
Or feel like a security guard if you put the camera bag full of expensive lenses down to take a photo in public.
You never know when some crazy person will grab your camera case & make a break for it lol.
Have fun.

there is a huge difference, between the powershot and the rebel....

the powershot is an advanced digital camera, with manual controls in addition to the automatic settings, it has a fixed zoom lens, which can not be changed out.

the rebel, is a dslr, with interchangable lenses, full manual and automatic controls, and will frankly, give you a better picture, and if you decide to go further with photography, will serve you well....