I have a Casio Exilim 8.1MP camera and I love it. I got it just before the holidays. It takes great pictures and is very easy to use. Intuitive menus with photo samples on screen rather than text is very helpful. You can adjust the camera to get more sophiticated or use about 30 pre-programmed settings like Children, Pets, B&W etc.
I also like the YouTube video mode as I take lots of that kind of footage of our newborn son and post for family to see.
I think it might have been discontinued, but you might be able to find one online somehwere.
FWIW it's the same top end P&S that Ken Rockwell recommends. Also, you should be able to find one under $300.