So, you're thinking of buying a new camera but don't know which avenue to take. Do you go with the compact point-and-shoot (let's call them PaS), DSLR, or the new thing -- a micro four-thirds? Digital-photography-school has a great post on this. Last Christmas eve, we discovered that our camera (a PaS) was broken due to our oldest chunk tossing it across the room as he was clearing out his mother's diaper bag. Of course, the wife and I thought DSLR since I had been talking it up for months. (Even though the real dilemma was how the heck do we take pictures of Christmas now. I ended buying a disposable one at Circle K at 11pm that we still haven't developed. I love the digital era. Ha!) So, we bought a Canon T1i (they came out with a T2i 1 1/2 months later to spite me). Well, let me tell you, the money is worth it for the camera to actually take the picture when I press the button -- no shutter lag!! That and the fact that you can change lenses and keep them when you buy a new camera, are the major benefits of a DSLR (plus so many more, but they are big). That's where micro 4/3 come it. They have interchangeable lenses and are more compact than DSLRs with comparable quality. However, all these options can be on the pricey side, starting at 500 buckaroos for DSLRs. Here's some options (I'm partial to Canon because anything they do with video is better than Nikon)...
Canon T1i (HD video, no manual exposure)
Canon T2i (HD video, with manual exposure. Video's just as good as the 7D for more than half the price)
I wouldn't spend more than the 7D (which I wouldn't do unless I worked photography full time).
And since I can't dis the PaSes too much, here are some options that give comparable quality to DSLRs, but still have shutter lag (ugh!).
Canon S90 (I would totally buy this as a second carry-around-all-the-time camera. It's also not a bad price for everything that it does -- like great low-light pics and very shallow depth of field or a blurry background.)
Panasonic DMC-LX3 (don't know much about this)
Just don't buy a PaS that looks like a DSLR. The only real advantage to these is there's more zoom.
UPDATE: Another PaS option...Samsung TL500 (not yet available for purchase). Also, best PaS by category.
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