The advent of small digital compact cameras and phone cameras for that matter means that there are more budding photographers out there than ever. While the quality of phone cameras has come a long way in the past few years they still do not produce as good image quality as you get from a good compact camera. Many of today's compact cameras can rival their big brothers in the DSLR range for features making them more adaptable to a large variety of shooting conditions. On a nice bright sunny day many of today's compact cameras will produce images that will be almost indistinguishable from a DSLR when they are printed out as large as A4
Amongst the thousands of compact cameras out there more than a few cameras compete for the top rated camera slot. As of September 2008 are Canon Powershot A580/590 or A720, Sony's cybershot N2, Panasonic TZ4/TZ5, and Fuji's F40fd come out in many reviews as being highly recommended or best buy.
Each of these cameras have individual features which make them best in there class in particular categories. For example Fuji's compact camera range has often been great for having low noise while Panasonic have tried to give you a large zoom in a small camera body. If you are looking for a camera that can take pictures in all conditions the Canon is hard to beat even though it does not have the zoom capability of the Panasonic range. Neither will it be as good in low light conditions as the Fuji.
Sony although newer to the digital camera market than some of the other names has a huge depth of experience in the digital video camera market. They very much staked how serious they are about the digital camera Market when they tied up with Konica-Minolta.
So in a nutshell, if you stick with the big camera names you won't go too far wrong in your selection of a suitable compact camera.
Most large camera manufacturers bring out new models every year, usually around the end of the summer months. Hopefully their cameras will have good reviews prior to the Christmas buying period. Often these cameras are updated slightly on the previous model by the inclusion of a few additional features or by squeezing in a few extra mega pixels.
If you are prepared to sacrifice having the latest bells and whistles on your new camera you can often pick up last years model at knock down prices. Good luck and happy shooting!
As a person who has a strong interest in photography Bill Morrison recommends http://www.digicamuser.com as a great place to find tips for taking digital photography and tips on buying editing and choosing a camera.