Disclaimer: the following is just my personal opinion, do your homework before you buy anything!  

Remember you are going to spend money on this so if you find some deal for $49, it's probably not the camera for you.  Also, ebay is not the best place to buy.  There are tons of scams and fraudulent products - I've even fallen for it before.  Check out B&H in New York, but honestly, Best Buy and Costco are great places to go.  You can get a warranty and they do price competitively.  I've taken tons of Samy's camera ads to Best Buy and had them match the price. But really, get the warranty - cameras can be slippery when used without the wrist strap. Believe me, I know.

And don't forget the mega pixel debate. In my opinion, most things you take end up at 8x10 size or smaller. When you translate that into pixels - you only need 6 - 8 mega pixels.  If you need poster size stuff, look at 10 mega pixel stuff.  My camera that I use at weddings is 12.  6 - 8 is more than plenty for vacation pictures.

The ugly side to all this mega pixel stuff is that you need to think about what happens after you take the picture.  Do you have enough room to store all that data on your computer? Or are you going to get snap happy and 6 months later feel the urge to buy a new computer.  Just think about it.  I have over a terabyte of storage and it really is a LOT of work to maintain all of that digital data. The larger your files, the more work you are going to have storing them.

There are three general types of point and shoot cameras:  

Standard
Where the lens slides out when you turn it on - optical zoom
$80 - $200

Compact
Where it just opens, nothing comes out, and the zoom is all internal - digital zoom
$150 - $400

Advanced
Look more bulky, with a much more sizeable lens that doesn't slide anywhere - optical zoom
$250 - $500

Which one is really up to you.  I personally use a compact one, because I keep it in my purse. My in-laws love their advanced one and I can do some pretty neat things with it.

Now onto specific types of cameras:

Point and Shoot:

Some come with only a view finder and others come with only the screen, and some come with both.  Only the screen can be not fun in the bright sun and sometimes that lag between pictures is because of that screen.  If you use the viewfinder and no screen, often you'll find that the pictures take sequentially much faster.  This is what you want to do if say, you are at Sea World and want to catch the dolphin mid jump.  A safe bet would be to get one with both and make sure it has a handy button to switch off the LCD to only use the viewfinder.

Digital SLR:

If you are ready to move up to a camera that changes lenses (like mine.) This is  a much pricier investment ($580 - $800+) and there are tons of options.  Personally I like the Nikon d40 and the Canon Rebel XTi. Often you can get these with lenses as a kit and get a deal. The lens it will come with is probably going to be a medium zoom. It's a great start. Since both of these cameras come with a flash built in, you really won't need anything else to get started.  Do think about memory cards and batteries as well as a case to keep them in.

Going forward if you do want to keep moving up and adding lenses there's really only 3 more things you might want:

1. A separate flash. Both brands have two versions, the cheaper version works fine.  
2. A 50mm lens.  This is good for close-ups, shots with lower aperture and can even be held up backwards to work as a macro (really) again there are two versions. I use the $100 plastic version and have no trouble.
3. A telephoto lens - something in the range of 50-200mm (this is not price).  This will be the most expensive thing next to the camera.  The ones with f/4.5-5.6 are the cheaper ones and will do what you need them to.  

At the bottom of this blog I have a link to my aStore with Amazon.  In it I have a list of what is in my camera bag as well as other products I think are cool that you might like.

I get loads of questions about the archival DVD, so I thought I'd take a minute to explain some tech-y, geek-y stuff about it.

When you go to your favorite electronics store (Best Buy for us) you have loads of choices when you go to buy CD's to burn things on. You'll notice tons of options, and sometimes they are on sale. Like the 100 pack for $4.97 the day after Thanksgiving?? That's great and all, but there is a reason it's so cheap. Since CD-Rs range considerably in price, is there any difference in quality? What difference in performance and archival life can you expect when comparing cheap discs to more expensive ones?  

------ Warning, this is about to be boring, if you want to skip this part and remain uneducated, scroll to the ********** ------

CD-Rs contain an organic dye layer above a reflective layer. A high-energy laser "burns" pits in this dye layer, forming dark, non-reflective permanent marks. When a recorded CD is played, a low powered laser reads the photos (as well as music and data) as a combination of reflective or non-reflective marks. Reusable -RW discs use a different dye that can be rewritten, but it's not considered as stable for long-term storage.

Two factors affect the longevity of CD-R discs, the type of dyes used and the type of metallic material used for the reflective layer, which may be silver, gold or a gold/silver alloy. Three dyes are commonly used in CD-R production: azo, cyanine and pthalocyanine. DVD-Rs use proprietary variations of cyanine dyes. All dyes change in time, including the dyes used to make CD-Rs. The National Institute of Standards and Technology tested optical disc media in 2004, subjecting various disc types to accelerated light, temperature and humidity levels. They found that dye type is generally considered one of the more important factors that may contribute to the stability of the media. Samples containing pthalocyanine dye performed better than other dye types, particularly when combined with a gold/silver alloy reflective layer. Discs containing cyanine dye performed well when exposed to light, but suffered under the temperature/humidity conditions. Discs containing azo dyes suffered under light as well as temperature/humidity tests. And when you write on them with a Sharpie instead of an archival pen, guess what happens, this disc is going to suffer, ie. eventually crap out on you.  

Unfortunately, finding out what kinds of dyes are used in disc production is not easy, since this information is seldom advertised.

One exception is Delkin, who stresses pthalocyanine dyes are used for their premium line of Archival Gold family of 300-year CD-R and 100-year DVD-R discs. Because I have a slutty trigger finger when I shoot and also because I shoot in RAW, the option of putting decent sized files on CD's versus DVD's is not an option. The DVD's hold more, store more compactly, and there is less "stuff" to lose.

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If you skipped that boring part, just know that I try to stay in the news about this subject and will always use the best possible preservation method when giving you your images in an electronic format. It might change over time, but there's always going to be a reason.

That being said, here are some handy tips to help you extend the life span and decrease chances of errors.

1. Avoid flexing and bending the disc. This can cause tiny cracks to appear that invite humidity problems and cause the disc layers to separate. DVD cases have a push-to-release hub that helps prevent flexing, since DVDs are particularly sensitive to flex problems. And guess what, the cases I use are, you guessed it, archival quality!  

2. Store discs in a cool, dry area and position vertically to prevent warping. You can find ways to do this in a fireproof safe or a safety deposit box.  

3. The safest place to write notes on a disc is in the clear area around the hub. This prevents ink solvents from migrating into the data. I won't write anythig on your disk but if you do, go to Staples and get archival safe pens.

4. Treat discs with care. Scratches may cause read errors, since scratches diffuse the clear plastic and the laser can't clearly define the non-reflective and reflective areas.

5. To clean a disc, use a CD or lens cloth with a liquid solution containing water or isopropyl alcohol. Wipe radially from the center to the outer edge. Do not use wood-based cleaning products such as paper towels or facial tissue, or liquids that contain acetone.

6. Remember that this DVD I give you is for use in a computer, not the DVD player attached to your television.