tough question
Maybe an unanswerable question. After what seemed like eons of research, I chose the Canon S30.
If you care, here's the process I went through.
I have a film SLR, and my wife has always wanted a point and shoot camera for everyday snapshots, something smaller that she didn't want to have to do a lot of work with. I decided that I wasn't going to buy any more film cameras, so I was trying to find something that would please her use-wise, and me techno-wise.
There are about a gazillion digital camera manufacturers out there, so the first thing I did was rule out the Casios, Samsungs, and the like. I reasoned that although these types of companies make electronics, I wanted a "real" camera manufacturer, figuring that their R&D dept's would be ahead of the game as far as the combination of color output, aesthetics, and ergonomics. I still subscribe to that theory.
Then, I went to my favorite digital photography website, dpreview.com. Go there. I highly recommend it. They've reviewed a myriad of different cameras in all ranges, and give an unbiased opinion of the camera. The reviews are very comprehensive, and even I have a hard time getting through them sometimes because there is so much information.
But don't just believe Phil (the owner of the site). Almost all manufacturers have a forum dedicated to them, some have more than one (SLR vs. point-and-shoot, for example). Read what the USERS say about them.
I have not found a single camera that has not had both positive and negative comments. You need to decide which of the comments are worthy, and what shortcomings you are willing to live with and what features you need.
Understand that there is no such thing as a perfect camera, especially in the digital world, which is a very young technology. (And even if there was, most people couldn't afford it, and everyone would complain about the price, and it wouldn't be perfect anymore.)
The features I like about the S30 -
It was in my price range
Very solid build - metal body which feels solid
Users liked the image output, and it was at the resolution I wanted
Good size, can fit in a shirt pocket, but is bigger than the Elph cameras, which, in my opinion, are too small to comfortably hold for long periods. (Not real comfortable for keeping in your pocket for a long time, though)
Also, don't get too caught up in the resolution. Megapixels are in some way the digital camera equivalent of the megahertz myth. For instance, I could've gotten the S40, which is the same camera as the S30, but four megapixels instead of three. However, the images out of the camera were not as nice on the S40 as the S30. (Canon have since replaced the S40 with the S45, which is an excellent camera.) You will need to temper the resolution requirements with what you are planning to do with the images (mainly web or TV viewing, printing at 4 X 6 or 8 X 10 or higher, etc.)
Don't think I am bashing Nikon either, because my film SLR is a Nikon. I just decided that the Canon digital was better for me. I feel Canon overall offers a better camera experience in their digital line than Nikon, and I usually recommend either the S30, S45, or G2/G3 to friends who ask me. By the way, if you don't need a lot of manual features, Kodak point and shoots seem like a really good valued consumer camera, but their build quality might be suspect, so if it something you are planning on using a lot, can't do without, or are going to be banging around a bit, I would shy away from those.
Chances are good that if you do even a minimum amount of homework, you will be happy with your decision whatever you buy. The real trick is just settling on one, and then using it!
Hope this helps (if you got this far, you're probably halfway home).