Heh, was a little startled to find my name on the topics list. I'm just glad it wasn't an angry hue and cry for my removal
I got a Canon PowerShot S500, which was around $400 (though they can be found cheaper... I bought through CompUSA for their excelent extended warenty package). It is, however, the top of the line for that model... Canon has many better cameras in different model lines that are WAY more expensive. I work with photos all the time for web stuff and am interested in ameture photography, so I wanted a small, point and shoot camera with high resolution and lots of bells and whistles.
Point being, there are many good consumer grade camers out there for much less. Moreover, you can often buy them through reputible online stores for WAY less than you could get in a "real" store.
I did a fair amount of research into what I wanted out of a camera and found that the Canon Digital Elph line was highly recomended across the board. There are some good, mid range cameras in that line (by mid range, I mean what most people look for in a camera - unless you're going to get into heavy photo-manipulation you don't need a 4 or 5 mega pixel camera. 2 or 3 mega-pixels will do just fine. Mega-pixels relate to image size and resolution, incedentally).
I'd go into a store with a wide selection and tell them your price range. Make them work for their minimum wage and have them show you a bunch of cameras slightly above your range and slightly below it. Tell them what you'd mostly use it for; family pictures, or professional grade landscape shots... artsy fartsy or smiling friend. They'll be able to point you in a good direction, and more over, you'll be able to finger them all; size does matter when it comes to a camera. Then, on a different day, when you've had a chance to look at some and think on it and what you need, go in to buy. Saves impulses purchesses
I've got a camera phone, though it is old at about a year and a half. It is fun, and I enjoy taking random pictures of my friends and having a picture of my choosing as my screen saver, but for actually taking pictures, it's not much use. I mostly use the camera feature for sending my bf pictures of my head sticking my toungue out or looking sly.