I bought a HP/Pentax one a couple of years ago - 3MP. It's fine for casual snaps, but the quality is nowhere near as good as my vintage SLR or the Olympus "bridge" 35mm that I use most. I was disappointed with it, and decided digicams aren't "it".
Then, earlier this year, a friend of mine bought an expensive new digicam ("last year's top of the poll") - the results are stunning! We've pulled small areas out of bigger pix and enlarged them to A4, and still the definition is excellent. I'm now looking round for one similar (but not as expensive).
I think the answer lies in three things: the quality of the glass (lens); the quality of the CCD; the number of MP. You need all three.