The biggest issue with using an S3 in a studio is controlling the lights. Hot lights are too hot for extensive shooting, so strobes are much more popular. If the S3 had either a hot shoe or PC sync port it could easily fire strobes. Without these it's limited to using the strobes as slaves to the manually controlled onboard flash unit, which isn't always ideal or feasible.
Another end of it is image quality. ISO50/100 is no problem so noise isn't an issue, and narrow apertures are usually used in studios on dSLRs anyway (background separation isn't always the main goal). BUT even though the S3 is a good camera, you don't really know image quality until you get a sharp prime on a dSLR and can examine one of those under 100% magnification. It's a beautiful thing.