When a friend asks me what camera to buy I usually guide them to a Panasonic Lumix or a Canon Ixus, and Panasonics latest compact, the DMC-LZ10, looks really promising. Photography blog have played around with the camera for a week or so and they really like it:

The Panasonic Lumix DMC-LZ10 is one of those rare beasts, a pocket camera that is well-suited to both complete beginner and more experienced photographer alike. Highly recommended.

Panasonic DMC-LZ10 - review [photographyblog.com]