Go either with a Panasonic FX01 or Fuji F10.
The Panny is my recommendation (currently the top selling model in Japan) b/c it sports a WIDE 28mm lens. The width is fantastic for capturing vistas while on vacation or capturing group photos indoors (i.e. tight quarters). The 28mm width is a Godsend in such a compact form factor (99.99% of compacts have 35, 36, 38 mm widths). In addition, it has OIS (optical image stabilization) for taking blur free pics in low light or to reduce accidental camera shake. It takes the universal device SD card which are cheap nowadays. Has a sharp Leica lens (from Leica...not the formula to make the lens as Sony does with Zeiss). It has a fantastic video mode and a battery that lasts 300 shots--rare for small cams. The LCD is bright, big (2.5") and high resolution. With all these amazing features and uniquenes, it's no surprise the FX01 is so popular when it recently hit the market, Street price is ~$275 but has features that people would buy at $500+.
http://www2.panasonic.com/webapp/wcs/st...11002&cachePartner=7000000000000005702
http://www.dpreview.com/reviews/read_opinions.asp?prodkey=panasonic_dmcfx01
http://reviews.cnet.com/Panasonic_DMC_F...ck/4852-6501_7-31736744.html?tag=uolst
The Fuji F10 is my second choice. It's bigger and take the dumb XD card which are MUCH LESS universal among devices than the SD card and much more expensive. These two things alone are deal killers for many compact p&s consumers, HOWEVER, it has fantastic (class leading) low light capability due to high ISO modes that contain acceptable amount of digital noise/grain. The picture quailty is very good, but has issues (like most compacts) with purple fringing (daylight contrast effect) and dynamic range (high contrast shots--strong lights w/ shadows). It's still in the first tier of picture taking. The Panny, however, takes better pics but bowing in the HIGH ISO category to the Fuji. The Fuji is at 36mm...very narrow.....which is typical for compacts.
http://www.dpreview.com/reviews/read_opinions.asp?prodkey=fuji_finepixf10
You won't go wrong with either, but since your parents are older (i.e. less steady hands), the camera shake feature of the Panny is the deal maker.
ALWAYS REMEMBER that these are compact cams, NOT DSLRS. Some ultra-finicky reviewers have UNREALISTIC expectations of compacts and compare them as such!.....or they're novices and don't know how to work around an issue....a good photographer can make most cams (even mediocre compacts) sing. That said, there will always be trade-offs of some form or other with performance/size. Kepp that in mind and you'll be a happy camper.....