I've had 35mm cameras and digital cameras.  I now carry an inexpensive Nikon pocket camera.  It takes good enough pictures for most things and it's handy.  It also shoots avi movies that I can edit and take out an individual frame.

However I have a friend that has a much better digital camera and his pictures are much better.  The larger cmos makes a difference. 

One thing I'd suggest it never buy a camera with a proprietary battery.

Check out the reviews at http://www.steves-digicams.com/camera-reviews/