Another thing I'd like to add: digital cameras today are a lot like CPUs from around 2001. Most uninformed people just go for higher megapixels and don't really care about the rest. What's really important is the quality of the sensor, not the resolution of the shots. Even if it's a 10 MP camera, you'll still get 10 MP of crap if the sensor sucks. Read lots of reviews when looking for cameras. There's a reason why cameras appear to be "dirt cheap" while other cameras with the same resolution cost $150 more.
Image quality. For a compact camera, you're really not doing any professional work that requires high resolutions. Anything beyond 5 or 6 MP is overkill for your everyday picture. Go for cameras with good image quality, not high resolution.
My Fuji F10 goes up to 6 MP, but I only set it at 3 MP since I really don't gain from higher resolutions. It has awesome image quality, low noise at high ISO (i.e. usually no need for image stabilization) and great battery life (but not AA batteries
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