I agree that Nikon are probably the best, but pricey. I am very happy with my Canon 350D , but it's a R10000 digital SLR.
I have some experience in digital photography, but I will gear my advice to the average user.
1. Don't get drawn into the marketing specs of camera's. Some manufactures have made us believe that megapixels are the most important stat. It's NOT! Sony is good at selling camera's not making them.
2. The most important thing in a camera by far is the lens. Far more important than the megapixels. The larger lenses are always better (lets more light in ). Compact camera's have got tiny lenses. They don't catch enough light. You won't get good photo's indoors and you will get distorted color and "fuzzy" edges.
3. The difference between 6 and 8 megapixel is not perceptable to the average user. Going for a Good 6 megapixel is far superior to an average 8 megapixel. Place more emphesis on the lens size and quality when choosing.
4. Always get a camera with a normal viewfinder in addition to the LCD. you cant see what is on the LCD if you are in direct sunlight. Also, don't get drawn in by huge LCD's they draw power, lots of power.
5. You can never have enough zoom. Ignore any digital zoom figures. Only look at Optical. the typical 4x-6x is never enough, even for the average user. Look for something with 8x minimum.
I would seriously look at the Canon S3 IS. It's a 6 megapixel semi-pro camera with a powerful 12x optical zoom and optical image stabilizer. That will give you a clear picture if your hands are not as stable as a surgeon's . SaCamera.co.za has it for R4599. It would be my pick as the best camera in the price range.
http://www.sacamera.co.za/proddetail.php?prod=CANCAM020
If you are looking for something more compact (keep in mind the moment you go compact you loose a large amount in photo quality). I would look at the Nikon Coolpix S4. It's swivel design better utilizes the interior space of the camera to accomidate better lenses. It's about R3500. Also, it requires no additional software to get the photo's off. Less software on a PC is always a plus. Especially if it is the rubbish software sony and canon design/buy. My first Digital Camera was a similar swivel design Coolpix 4500. it is 4 years old now and still feels as solid as the first day. Nikon's are exceptionally well built
http://www.sacamera.co.za/proddetail.php?prod=NIKCAM012
My friend recently bought a Panasonic DMC-TZ1. It has 6 megapixels and 10x optical zoom with image stabilizer. I have not work with the camera myself, but I can see from the photo's that he has sent me that it is a great camera. It sells for about R3600 with a 256mb memory card.
I had a look at the sony a while back. STAY AWAY.
1. The 3x zoom is class-lagging, the lens is Tiny
2. In 2 years time, you will have a broken and scratched touchscreen because of the missing stylus. Stick with buttons, they work.
3. At least it has good electronics, but so does Canon and Nikon.
4. O and the memory for it is twice as expensive as the competition's.
5. It does not take standard AA batteries. One day when you are on vacation, you are going to get a flat battery with nowhere to recharge it. You are going to curse yourself for not being able to buy normal alkiline AA's.
anyway, my "Chinese math is better than Telkom math"'s worth