Since the US photo industry trade show was just earlier this week, expect a confusing choice. Older models, most of which are quite competent, will be discounted to make way for the new in the next coming weeks.
It's probably a good time to buy (assuming you don't need it yesterday) but a bad time to choose. If you're not in a hurry, you may find you can get everything you want and need in 3 or 6 months for way less than $1000, because digicams are now firmly in the "consumer" category and are selling quite well today. Prices are falling while features are improving.
A thou will buy one fine camera today. Depending on how close to your budget you want to get, look for a 4 or 5 Megapixel model from the usual suspects; you should be able to get good models below your budget if you're willing to settle for 3 to 4 Mpixels.
Cameras of this capacity are overkill for the web and good for 8x10 prints from a decent inkjet. The 3MP models will show some quality differences with 8x10 prints versus the 4 and up models, but most people report they are happy with the quality. If you plan to only print 4x6 or 5x7 prints, any camera of 3MP or better will do very nicely. DM suggested 2MP but a 3MP model will easily squeeze into your budget.
This chart shows what size of print you can expect to get with good results and varous MP sensors. I'm a bit fussier than the chart, but most people would be happy following it.
A nice thing about the bigger MP cameras is you get to choose the quality when you take your shots. With a 128MB card at maximum quality (5 MP RAW or TIFF format, 2560x1920 pixels, uncompressed 17 MB) I can take about 8 photos; by dropping the resolution to 3 MP I can up that to 12, and by choosing Fine (4:1) JPEG compression at 3MP I can record 52. If the picture was destined for the web, I could take them at 1600x1200 and get 20 RAW images or almost 300 at Normal JPEG compression.
If you click on my weblink (the little house icon), you will go to a page with photos I took at 3MP and Fine JPEG compression. When I prepared them for the web they were reduced to 800x600 and compressed about 8x. If I planned to only use the photos on the web, I could have stored about 800 such photos on the camera's memory card.
Spend no money and no attention on digital zoom; it is truly useless. Get a good optical zoom if you can, and only compare the optical zoom when choosing a camera. Did I mention digital zoom is useless? Well, it's useless.
You might end up happier if you save about $250 of your budget for a USB card reader ($30-60), a spare battery (varies, mine cost $65), and an extra card of whatever kind your chosen camera takes. A good choice is a 128MB card which can be had for about $120 or less. For about $130 you can buy Firewire card readers today, which should make downloading photos nearly instantaneous.
In general, people on this forum like Canon, some are fond of Sony, and I'm a fan of Nikon.
Ask if you can bop around the store and snap a photo or two and get them to print a sample. Naturally, this rules out shopping at places like Future Shop, which is a good habit to break anyway.
There are two new technologies that will be in everybody's cameras within 2 to 3 years: new image sensors (Foveon) that will nearly triple image quality, and LED based displays that are bright and easy to see in both dim light and sunlight. Both are available today, but in very limited models. Sigma has sold a Foveon chip camera for about a year (they are not well known outside pro photo circles, but are are well known to the industry) and it's expensive, way out of your or my budget. That will change, though.
Kodak has announced a new consumer digicam (Easyshare LS633) with the LED driven display this week, it will be priced at US 399 ( $C 600) and includes a 3x optical zoom, the OLED display, and a 3MP class image sensor. Won't be in stores for a month or two, but as you can see you can get a lot of camera for that kind of money today.
Foveon Sensor
Sigma SD9
Oh, and finally: Digital Zoom is useless.
