I have a Olympus C2040, works excellent, it has very sharp images for a 2.1mp camera. I'd highly recommend olympus. I'd suggest the Stylus 300 or 400. (one's 3.0mp and one's 4.0mp). I'd also suggest looking at Canon, their A 70 and elph series are very good. I personally just got a Fuji F401 for 200 bucks at ritz camera. Everywhere else selling it for 300 or more online. My local computer store has it for 400. www.ritzcamera.com
I just got an olypus mju 400, its a 4 megapixel camera but the mju 300 is the same with 3.2 megapixel.
It works just fine, I really like the small size and solid casing and the pics are fine even when it can't find the right lighting or focus (due to lack of contrast or light, which results in lack of contrast)
Besides the default top manufacturers, Cannon, Olympus, Sony, you ought to consider Pentax. Now you probably will not find this brand on your typical Best Buy shelf, but this company has been around for a long time and I swear by them. I own a Pentax Optio 555, a 5Mpix unit, a bit more than you've been looking for. But this unit is worth every extra penny over the units discussed in this thread.
Nice attributes: tiny, 5x optical!!!, MMC/SD memory (best memory format), best battery life of any camera out there, incredible pictures.
I've owned this camera for some time. I've used friends' Olympus, Sony and Cannon equivelants side by side on many occasions. No comparision...