When I was buying my first digital, I emailed 6 friends who are geeks. Got two replies. Note: regarding MP(megapixels), the standard next year will be 8 or so...I got a 6.

Also, a helpful salesperson who isn't just out to make a sale should be able to help you make the best choice for you.

Stick with CAMERA manufacturers - Olympus, Canon, etc - NOT Hewlett-Packard and other COMPUTER manufacturers.

Olympus won with me!
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Sounds like you've got the basics sorted. 4-5MP, optical zoom in preference to just digital zoom. Canon's are one of the best makes - I'd always recommend them, but Olympus and Pentax are fine. I'd stick away from Nikon unless you are buying one of the more expensive models - their low end/mid range models aren't really that special.

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Well Congratulations on your future digital camera purchase!

I think the important things to keep in mind with regards to digital cameras are:

1. Batteries - Does the camera use a special kind? How expensive are the batteries? If they are special kind there is a chance you will have trouble finding replacements. Even rechargeable batteries need to be replaced after about a 1000 charges.

2. Memory cards - The higher the MP of your camera the more memory it will use to save your images. When you are considering how much memory to get for your camera think about how many pictures you will need to keep in your camera before you get a chance to transfer it to your 'puter. i.e.. You go on holidays and plan to take pictures for a whole day before transferring.Or perhaps you leave your 'puter at home and need to save an entire two weeks worth of pictures in your camera. Find out how much memory an average picture uses and divide that number by the amount of memory you buy to see how many pictures you can fit on that memory card. Although it may be cheaper to buy one large memory card, you might consider getting two smaller memory cards instead. The idea is not to have all your eggs in one basket sort of thing. Final note on memory cards, I understand that some are faster than others. Faster memory means the image transfers faster after you press the clicker button. So you will be ready for the next picture sooner. It might cost more, so if this is important to you look out for it.

3. Research - Consult the manufacturers website to find out more about the cameras you are considering. They will tell you so much more than any salesman can. Then use Google and find sites where people talk about their problems with those brands of cameras. This can help you anticipate problems you might encounter, or which cameras to avoid.

4. Lens - Just like the traditional SLR cameras, the better the lens system the better quality images you will get. I've heard from my brother that cameras made by actual camera companies are better in this regard. So cameras from companies like HP might have better "technical" specifications but the imaging system will not be as good as a camera from say Canon, who have a long history in the camera business.

5. Viewer Display - The bigger the better. Of course this uses more power, but in my opinion it makes a difference.

6. Size vs. Function - If I ever get another digital camera I will get one that fits in my pocket and takes decent pictures. But it depends what you want to do with it. The convenience of being able to put it in my pocket and have it ready appeals to me. Of course the smaller the more likely it is to be misplaced, forgotten, or just plain taken.

7. Mega Pixels - You are right about the 4-5 MP range. I also think, the higher the better.

8. Printers - In my opinion, it is not worth getting a color inkjet printer for your camera. Just send them to London drugs, Future Shop or some other professional printer. Not only will they come out better you will probably be able to print them for less $$$. I send mine to Future Shop over the Internet and pick them up the next day. I could even have then mailed to me if I wanted. I've never been disappointed, never had to reprint and I can choose the images I want printed at my leisure without having to wait in line. I think even Winter Photography will print digital images.