I bought a Sony Cybershot camera last February to capture family moments and other than some concerns about durability (cracked LCD, sticky shutter over the lens, sticky control dial, all courtesy my now 20-month-old daughter) I'm thoroughly impressed. The pictures are clear, the depth of field is vastly improved, and the colours are brilliant.
I don't use too many of the special features because, quite honestly, I haven't found it necessary. Sometimes I use the ISO function to get pictures of moving objects, or I'll dial up the landscape mode to capture a view. I'll click on the control pad sometimes to turn off the flash, I'll click on the flower button to allow for super close-ups, and I'll take a little video. But there are literally a hundred features that I haven't had to use yet, although I'm glad they're there.
I don't even think about the Megapixels anymore, although at the time I was purchasing the camera I thought 10.1 was kind of ridiculous for a point and shoot compact camera with a 5X optical zoom. I made sure to set the camera to take medium size photos because a large photo at 10.1 megapixels is a little too large, over 10 MB usually, and my old computer isn't great at processing larger images. They're also harder to e-mail, post online, etc.
Pretty much any new point-and-shoot camera is at 10.1 MP or better these days, and some compact cameras are over 14 MP. In terms of the amount of data you actually need to print and blow up the occasional photo that's far more pixels than the average person requires. It's also the thing you should probably focus on the least when making a camera purchase - sure, it's impressive to think about all those pixels but it's the other features of a camera that you should really be looking at.
In fact a few companies like Canon are actually scaling back from plus-14 MP cameras to 10 MP in order to use more sensitive CCD (charge coupled device) chips that are faster and produce better photos.
Here's a list of features, some courtesy of Tech Radar (www.techradar.com) that you might want to look for:
Durability - You no longer need to compromise quality and ease-of-use when purchasing a shock resistant, freeze-proof and/or waterproof camera that you can throw in your mountain bike pack, the pocket of your ski jacket, or take with you on your next snorkeling trip. For example, the Canon PowerShot D10 is a 12.1 MP camera with a 3X optical zoom that you can drop over a metre or take underwater up to 10 metres. It's about $350 to buy, which is expensive for a point and shoot these days but probably close to what you paid for your first digital camera just a few years ago. Almost every camera manufacturer is making a credible waterproof camera these days, so be sure to shop around.