I recently purchased an S5000. Great camera for the price (about 200 quid where I sourced it from), only a 3mp sensor but some funky Fuji diagonal-CCD technology outputs at 6 megapixels. Features a 10x optical zoom and 2.2x digital zoom, giving you 22x zoom combined. The images it produces are great, if a little noisy in the 6 megapixel mode. Autofocus is not the fastest, but worked well enough for me at Leuchars this year. Burst/Continuous shot modes are very good, allowing you to capture as many 1/2mp images as the card can hold, or five full-quality images in rapid succession.
Camera has full automatic, shutter priority, aperture priority and full manual modes, so is perfect for when you decide to customise your shots. Also takes video with sound, and has built in "scene" modes (night, action, portrait, scenery) for when you just want to "point and shoot". Doesn't have a hotshoe (not many non-SLR do) but comes with adapter ring to support a wide range of telephoto or wide angle lens additions.
Great little camera, and they've just release an updated version (S5500) with an extra megapixel (4mp CCD, 8mp output). You can pick up the new version with bundled charger and batteries for £284 from various online retailers.
The camera takes xD picture cards which were on the pricey side until recently, but nowadays I could pick up a 512mb card for the price I paid for a 256mb. Nowadays, 256mb from Olympus will set you back £60 quid, which is a good enough price.
Looks great too...the "mini-SLR" style is becoming more and more popular these days. It isn't too weighty (feels "comfortable", not flimsy). You'll want to use the included strap though, or buy a case for it, because there is no way you could fit it in a pocket. Might work with some baggy trousers but you might also get some weird looks that way, especially with the lens adapter ring installed as recommended
