I purchased a Canon G2 back in June, and I just had my first digital pictures printed at our local Walmart on the new Fuji printer system. The pictures, were to say the least, fantastic. I had some 8x10's made and the quality of the prints was amazing. Walmart will do 4x6 prints for $.29 a piece, 5x7's for $1.50, and 8x10's for $4.00.
The great thing about a digital camera is that you have the chance to review all the pictures immediately after you snap the picture. If the lighting was off, you can review your image, and snap again. Somebody walked in the middle of the shot, no problem, just do it again. You can take 200 pictures in a days time, go back home and review them, and decide that you only want to print 20 of them. You only have to pay development costs for 20 of them, not the full 200.
I have used my digital camera more times in one week long vacation, than I've used my film based camera in the last 4 years. There is no fear of ruining film, fearing poor shots and not knowing until you paid development fees. No need to develop a whole role for only one or two pictures, ect.
All in all, for vacation pics, and family reunions, and most other applications, a digital camera is simply a better choice for the average picture taker. Right now, $300-$400 can get you fantastic picutre quality. The up front costs are a little bit higher, but the reduced development fees, and piece of mind far make up for it.