I recently went through this...I was looking at fujifilm 2600z 2mp 3x optical zoom/2.5x digital zoom camera..excellent..small and nice pictures then the toshiba PDR-M71 deal at gateway came around and I picked this up..very nice camera ..heavier than I wanted by 2 ounces and no clam shell cover a lens cap..but it is 3mp camera with 2.8 optical zoom/2.2x digital zoom...and has movie mode with sound..thought this was not important but tried it and loved it with my 5 year old..so I decided against the fujifilm(smaller, less wgt, clam shell cover)
The link above is great..these new digicam give great pics...I would recommend 2mp-3mp with 3x optical zoom...Olympus 5100z(I think) 2mp, fujifilm 2600z excellent choice..the toshiba is very nice as well and if gateway has it with a coupon I got it for $305...I also picked up a 128 mg SM card and rechargable batteries..
the one nice thing about the Fujifilm 2600z is it comes with rechargable batteies...