I bought an Olympus C-900Z (D-450Z in USA)in May last year, after spending/wasting countless hours trolling for reviews and information. Since then obviously things have changed and there are much better or rather wider choices available.
Plenty of suggested reading at any or all of the following sites:
www.dcresource.com (excellent for reviews & samples)
www.steves-digicams.com (as above)
www.imaging-resource.com (as above)
www.photodo.com www.digital-solution.com www.powershot.com (Canon site)
Last Christmas, I went for a Canon S10 for my old boy and he raves about it. From personal experience, I'm still very happy with the Olympus I bought.
At the end of the day, digital cameras can't (yet!) compare to the older film cameras, but it's getting harder to tell the difference. My honest input would be to buy the camera with the resolution/features that you are happy with. Don't be overly concerned with having the latest thing unless budget is not an issue. (With GBP800 to spend you'll have gallons of choice though.)
If you want to snap & store, printing only the very occasional picture, a simpler camera will do the trick. Mine is 1.3 mega pixles which produces and outstanding picture IMHO.
If you want more links or whatever, I don't mind. Read reviews with an open mind though - for every happy user you'll find a dissatisfied one ;-)
Good luck & best wishes.