I find the Canon IXUS40 range upwards is very easy to use. 1Gb card takes heaps of pictures along with a huge amount of video.
3*Optical zoom, 5*digital zoom. 3Mpix.
It's small, can be operated by one hand and fits very nicely into a pocket, flightbag. A little bigger than a credit card.
Would like to see Canon go up to a 5-10 optical zoom.