[trevor]

In my opinion:
Optical zoom = good.
Digital zoom = bad.

Lithium Ion battery = good.
AA or NiMh batteries = bad.

More megapixels just means that you can view or print your pics at larger sizes, or you can "digitally" zoom in more during editing. For everyday 5" x 7" pictures 3 or 4 megapixels will suffice.

The more memory the better, but this is usually an add on purchase as the cards that come with most cameras tend to be quite small.

I have a Nikon CoolPix 3500, and although it is a few years old, it works great and takes great pictures in most lighting conditions.

Everything Chris said is spot on. On top of those things, you want something with a rechargeable battery - preferably Lithium Ion. The ones that use standard AA's run out real quick.

Nikon & Canon are always good choices as they have been in the market for centuries and seem to have it right with their products.