
I bought a Panasonic Lumix DMC-FZ7 camera for Angela on her birthday. It's sub-SLR digital camera, but seeing how it was less than half the price of any digital SLR, and that it's easily the most complex and versatile camera we've ever owned, it's perfect for us.
At the time I bought it, there were two other cameras in its class--the Canon PowerShot S3 IS and the Sony DSC-H5. For various reasons I went with the Panasonic, but it would probably have been a bit harder to decide had the Canon been $100 cheaper.
Things we like: 6 megapixels, 12x optical zoom, full control over shutter speed (1/2000s - 60s) and aperture (okay, we really don't quite understand what aperture means yet, but Angela's taking a class) and a whole bunch of other settings we don't really understand, long battery life (500 pictures at least), video functionality that rivals our camcorder (about 12 minutes per gigabyte), burst mode (3 pictures/second), manual focus, and a very easy-to-use interface.