I have the Canon IXUS i, and it's a tiny 4MP camera. People still 'wow' when my girlfriend or I take it out. And it's so small, you don't even think twice about putting it into your pocket when you go out. The quality is excellent, the SD card is tiny, and it's a very solid machine, and much faster than any of my friend's cameras. I love it, and I use it for 'snapshots', and a Nikon D-70 for my 'serious' photography.
Of course, if you can afford it, go for the Nikon D-70.