I have a degree in photography and have studied available digital cameras in great depth before purchasing.
I have an old Canon S400 Elph (pocket 4 mp) and an 8 mp Nikon Coolpix 8400 (top of the line of the sub-SLRs).
I love both cameras and am happy with each.
The most important aspect to any camera is that it can only take pictures if you have it with you;
if you are only going to own one camera make sure that it easily fits into you pocket.
I cannot emphasize this enough.
I never hesitate to take it with me if I think there’s a chance I might take pictures or movies.
18 months ago my pregnant wife spent a month in the hospital and our baby was born baby spent 7 weeks in the NICU.
I carried that thing in my pocket all day long for 11 weeks and I hardly noticed it.
Now they make them even smaller.
The picture quality of some pocket cameras is about 95% of that of much bigger and more expensive cameras.
Do not be swayed by mega pixels.
The picture below was taken with the 8 MB Nikon and reduced to HALF of the width and height.
The picture below was taken with the old 4 MB Canon and reduced to 45% of the width and height.
Even 4 mp is overkill.
Another thing to consider is movie modes.
The newer Canons will take 640x480 WMP compatible movies at 30 or even FPS.
My Nikon does as well, but only in QuickTime.
QT is slightly better quality, but a pain to edit on a PC.
Get this:
PowerShot SD450