Canon's are the way to go for quality digital cameras.
The SD880 IS has been mentioned. My fiance has the SD870 IS. It takes extremely good pictures, and has good quality video and sound (I don't have any examples, sorry). She researched cameras for months at www.dpreview.com, which is a site that is dedicated to reviewing digital cameras, and she also reviewed consumer reports. You probably want to check out dpreview for some good reviews and find out the pluses of each camera.
The SD8xx line can be had from newegg for mid $200 range.