I have 2 digital camera, the first is a Sony Mavica fd-91, it is outdated and they don't make it anymore, but I hang onto it because it has an incredible 14x zoom.

I currently have a Sony Cyvbershot DSC-S85 that I absolutely love, we paid full price for it when it first came out, but you can get them for $450 - $499 now. It is a four megapixel camera, if you plan on printing out photos you'll be glad to have the extra pixels.

If you don't plan on printing many out, and only using it for webpages and emails, a lower amount of pixels will be satisfactory.

Other things to consider:

Battery life (this is one big reason I like the Sony digital cameras - they use Infolithium batteries - while more expensive, I can do a whole day's shooting on one battery charge - some digital cameras eat through AA batteries in 10-20 pictures)

zoom: Digital zoom is worthless, you can do the same thing with photo software. Optical zoom is good, pay attention to this if you are taking pictures of things far away.