I've been using a Panasonic Lumix DMC-FZ20 for the last 2 years. 5 Megapixels, 12x optical zoom(!). Picture quality is excellent, colors are very close to original, I like it.

Nevertheless, I would not buy it again: There is no optical viewfinder, only one
large LCD which is impossible to read in bright sunlight, and a mini LCD in the
top left of the camera which would be ok but has low resolution only so you can't
really use it for precision focussing. (Yes the camera does have autofocus but
sometimes I want it to focus on a different object than it thinks). The final solution for this flaw would be an SLR type camera (was too expensive then).

For the full range of photo phun, watch out for an optical zoom with a large range, digital zoom is something you can do on your PC more conveniently.

Don't skimp on the storage capability: A picture can easily occupy 2-3 MB. My camera came with a 16MB card which is simply ridiculous, so I got a 512 MB SD card, large enough for 150+ photos (= big enough for me). Use a quality brand card here (I use Kingston or SanDisk), the cheapies frequently save on protection against electrostatic discharges which will kill the card, or are slow to store the picture so you can't take fast sequences of pictures. Card type(SD, XD, MM, whatever) is not too important as long as it's compatible to your PC/Mac/... card reader, or the camera has its own USB connection.

Planned obsolescense is a big thing in this market: Get all the accessories you will ever want for your toy as soon as you can afford them, or they may be available no longer... or just hard(er) to obtain. Also get a second battery pack so if one pack is empty, you can switch to the second. Better yet, get a digicam which uses standard batteries, and invest into some modern (LiIon, NiMH, etc., NOT NiCd!) rechargeable cells plus a good charger.

And most important: RT*M, even if it has 500 pages [Linked Image] You might find a surprise or two in there... and will make you a better photographer because you know how to adjust the camera/what you can do with it. It's really worth your time.