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I just received a Canon PowerShot A640 as an xmas gift but I spec'd it out. I liked the combination of point and shoot simplicity while still giving me manual controls for shutter speed, aperture and ISO. It was reviewed favorably by owners as well as many of the photography sites. You can get it for around $330. I already have a Nikon print SLR camera so I just wanted the ease of use of a point and shoot.
Point and shoots for $500 are the ones that only offer really compact size and stylish designs. Though you might expect you're paying for better imaging, I don't think you'll get a better picture than a reputable 6-10 megapixel camera for under $400 IMO.
the one im looking at is the Olympus Stylus 730, its not a full size, but it seems to have all the right features.. $350 everywhere except Amazon has it for $270!!