- If you want something that's cheap and good, get the Panasonic LZ8 ($100 with free shipping). Usually I recommend the Canon Powershot models, such as the Canon A590 IS ($110, fs), but this year the Panasonic is definitely the one to beat: it has an impressive wide zoom range and manual shooting controls without sacrificing user-friendliness.
- If you want something that is eye candy but also a decent camera, then I'm really not the guy to ask, but... if I were I would recommend that you sell your soul and buy the Sony Cybershot W120 ($140). I grudgingly admit that it is well-built, functional, and attractive... although I FREAKIN' HATE SONY and their stupid Memory Stick cards!!!
- If you want something fancier, get a DSLR. Seriously. Yeah, they're bulkier but it's just pointless to pay $400 for a high-end compact when you can get a vastly superior SLR for $550. Basically the only downside of an SLR is that you can't do video on any of the entry-level models yet.
I am partial to Pentax. The Pentax K200D ($565 with kit lens) is a great deal, with built-in stabilization, and a water-resistant body that you can't get except on high-end models from other companies. Also, it comes with a non-crappy lens, unlike most other entry-level models.
Canon and Nikon are not doing anything exciting in entry-level DSLRs these days.
The Olympus E520 ($500 with kit lens) is enticingly cheap, and I liked its predecessor the E-510 a lot.
The Olympus E-520 offers slightly faster burst mode, but the Pentax K200D is water-resistant, is better in low-light, and has a much wider lens selection (= every Pentax lens ever made).
There you have it...
UPDATE:
A side-by-side comparison of the Canon 450D/XSi, Nikon D60, Pentax K200D, Sony A200, and Olympus E-520 from dpreview.com with links to reviews. And here's a pretty good comparison by a guy trying to choose between the K200D, 450D/XSi, and D60.
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