Seeing as you stated your budget in pounds, it makes my life easier, because it seems you are from the UK
This model is discontinued now, to make way for the seven-megapixel efforts from Sony, however it's still a fantastic model, very quick, amazing battery life, Carl Zeiss lens, and still 5 mega pixels.
http://www.ebuyer.com/customer/products/index.html?rb=5438107358&action=c2hvd19wcm9kdWN0X292ZXJ2aWV3&product_uid=63756
Another one I might suggest would be the Canon IXUS 30
http://www.jessops.com/search/viewproduct.cfm?PRODUCT=CANIXUSD30&BRAND=&CONTINUE=false&FEATS=&FIRSTPRICE=&KEYWORD=&LEVEL=&MODELNUMBER=&NEWQUERY=True&NODE=0&NODE_PATH=0&ORD=ASC&ORDERBY=&QUANTITY=10&RECENT=0&REFINE=&SEARCH_FOR=ixus%2030&SEARCHNODE=0&SEARCHURL=dointellisearch.cfm&SECONDPRICE=&SHOWCASEID=&STARTROW=1&SUBS=&WORD_SEARCH=Y&
Very very compact camera, big screen, 3.2 megapixels and SD card compatible.
So although more expensive than the Sony, its memory cards are cheaper, and you'll get more pictures on the cards as it's only 3.2 megapixels. (Up to A4 print size)
I would probably take the Sony, as the battery life is better, it's got a few more manual features, and the lens quality is excellent. However you'd be buying into memory stick, so if you upgraded later, it'd either have to be a Sony, or you'd have to get rid of your cards. The Canon is only really that much money because of its size.