I just bought my wife a Sony Cybershot W80. She loves it. I think it is 7.2 MP, and it was under $200 at Best Buy. The other camera I was considering was a Cannon SD1000. I chose the Sony because they had an open box one and gave me 15 or 20% off.

How big of pictures do you plan on doing? I don't remember the exact number, but once you get bigger than an 8.5"X11", nothing over 4 MP makes much difference. Something like that.