Many will say the Canon A540 which is a "does everything well but nothing extraordinarily" kind of digicam. That's the mainstream pick.
I suggest the Panasonic Lumix LZ5. It has an optically-stabilized 6x zoom (unusual in the under-$200 category), 2.5" LCD and can take a ton of pics on a set of NiMH AAs. Image stabilization is great, I wouldn't want a camera without it.