I am often asked about recommendations for a new camera. I personally own two Canon SLRs and a Sony Cybershot. Here's a reply I recently sent a friend after she asked me what suggestions I have....
I tell everyone the same thing, buy the best one you can afford :) Its like a laptop computer, they usually are out of date before you can even take it out of the store and they are all basically the same but with extra bells and whistles. I prefer a point and shoot that does video, I find I use video more than still images quite often. I have had a Canon Elf in the past as well as a Sony Cybershot (currently) and really like both. The Sony has pretty dang good video. They are both super small (just a little bigger than a cell phone) so I keep mine in my purse most of the time. Some people prefer one that is a bit bigger so they can hold it more steady, but I already have a big SLR so I don't want a big point & shoot. I've never really looked at or compared those middle size cameras. If you want to be able to get fast shots, indoor sports/events, etc then I'd go with an SLR its really the only way to truely snap a picture and what you see is what you get without a delay. The downfall is they are bulky/heavy and usually cost quite a bit more. To get the most out of an SLR you will want to take the time to learn how to use manual settings as well. So, its all about what you want to invest, both in money and time. Check out the website http://wwww.dpreview.com to read reviews and once you narrow down a couple choices you can compare them side-by-side. Good luck!
