Thoughts on Selecting a Camera

Keep the Cost Low - in two years cameras will be far beyond what they are today - think of this as a two year investment in case you want a newer model that has better features.
Zoom Beats Megapixel - doubling a cameras zoom doubles the pixels in the image in height and doubles the pixels in width so the pixels are increased by the square. To compare to a 2 megapixel camera with 12x zoom, a 6x zoom camera would have to have 6.5 megapixels and a 3x zoom camera would need 29 megapixels.* For more info go to Telephoto Figure of Merit: Explanation and Uses By Rodger Carter and Rick Matthews http://www.mav-magazine.com/Jun2000/FigureofMerit/
Image Stabilization is Important in Enlarged Pictures - Whether an image is zoomed or blown up, the same data is used, and 'shake' will make the image fuzzy unless your camera has a stabilized lens. The Panasonic DMC-FZ1 is one of the few cameras having a stabilized lense.
Consider Size - Small if it is a camera to be used for everyday use, larger for mainly on trips or special occasions.
My Recommendation - Panasonic DMC-FZ1 and Canon SD100 - an investment of about $400 that will give you an everyday camera for carrying in your pocket or purse, and a super zoom stabilized lense camera for taking those nice to have shots that others only dream about.

*Figure of Merit (model, megapixels, zoom: figure of merit)