Here is the first ‘real’ picture I took with the camera (Warning: this is the full-sized image and it is a 520Kb file); there are probably a million little things wrong with the composition etc, but I think it demonstrates that 2 megapixels can be enough to get a good image, as well as demonstrating that the camera coped with the particular shooting conditions quite admirably.
Having used both 2 and 3-megapixel models, I personally think the difference is noticable. I recommend a 3+ megapixel model.
Mrs. RickJay’s Kodak 3.1 megapixel camera cost $449 Canadian at a Best Buy. That’s about $320 to you.
If you’re on a budget, drop to 2 megapixel and BUY MORE MEMORY. You will appreciate it.
An excellent thread Shirley, thanks for posting this! I’ve been a late bloomer to the Digicam world because 1) I love the weight, sound, looks and most importantly results of my SLR and 2) I do have sentimental memories of the whole art. My father, while an amateur, had a darkroom, did is own enlargements etc when I was growing up. He was a professional to me. 
None the less, we are now in the midst of the SLR/Digital transition as well, and I have heard some great things in this thread that are enouraging.
So far in my yet inconclusive research, I am still leaning toward the somewhat dated Canon G3 @ 3.9 Mp. The G5 is out @ 5 Mp, but it’s too pricey yet for my likes and doesn’t offer enough in return for the price IMHO.
Buy the amount of Mp that suites your needs. In other words, if you’re not going to be blowing up a lot of photographs, then lower Mp’s is probably fine. However, if you like large blow-ups of 8x10 or larger and still want close-to-or-SLR-like quality, then you’ll want to be closer to 4 Mp or above.
BTW, you don’t have even be able to print them yourself…you can submit them online to many of your local stores and pick them up the next day. Wal-Mart does a fine job (So my friends say)
Here’s a few things that I think are important in a Digicam, that this camera offers (others do too, but so far, bang for buck, I like this one)
– Hot shoe for external flash: Really important to me. It provides more lighting flexibility/natural shadowing and removes the need for that disturbing pre-flash light show otherwise needed for pupil reduction. If you’re doing indoor close-ups of littluns, you’ll really appreciate the external flash.
– Removable Lens: self-explanatory
– Compact Flash card
– Completely braindead automatic to (almost) complete manual overide: This way the whole family can use it, and I can have fun too. 
Also it’s great for quick, on the fly shots, as well as calculated shots you want to experiment with.
Just my $0.02
The problem with all this is that you end up like me…with pixel envy.