I have a Canon Powershot A40. Current local retail cost is $250. It is a 2 Megapixel camera, and I LOVE it!! 3X optical zoom, very nice compact size (not as small as the Canon Digital Elph series, which are quite a bit smaller, but the A40 can still fit in my front pocket of my pants!).
At high resolution (with normal, not high quality compression), the pics are 1600x1200 and I can fit 400 pics on a 256MB Compactflash card. CF cards have come WAY down in price, you can get 256MB Viking cards for about $95 or less these days.
I HIGHLY RECOMMEND the Powershot A40, its a GREAT little camera. Nicely designed, great feel, beautiful pics. All Canon products are great and I can really strongly recommend this camera.
On a side note, the best case for it is the medium sized Samsonite "Worldproof" case, available at Best Buy for about $15 or so. Well padded, can hold the camera plus an extra set of batteries plus a few CF cards. The Samsonite camera cases are REALLY nice.
Also, whatever camera you get, pick up a set of rechargeable NIMH batteries (I got Rayovac ones) and a charger. You can get them from Best Buy as well. NIMH batteries last a LONG time (longer than alkaline), and if you pick up two sets (8 batteries total), you can have one set in reserve in your camera bag for when you need it.
Finally, I don't use the back-panel LCD for composing pics at all. It burns too much battery power up (for any digial camera). Just use the viewfinder to shoot, and the back panel LCD will show you a BRIEF shot of the image (about 2 seconds) to look at. I do use the back panel LCD to show other people the pics I took or to review them myself.
Good luck and let us know what you get. The A40 is a really nice camera, you can't go wrong with it. But AVOID Kodak cameras, they're junk. Sony are overpriced IMO (although their digital 8MM camcorders are excellent, I have one of those).
