Last night, I just bought a new digital camera. It's an HP Photosmart 817. It's pretty cool. It's 5.1 mega pixel, has 5x optical zoom, with an additional 8x digital zoom, and has 15 different shooting modes (including panarama stitching, which I think is really cool). I got the camera for $180.
Personally, I wouldnt buy anything less than 5 megapixels, but at the same time, you really dont need anything MORE than that. And you can get good 5MP cameras for around $100 if you look, you just have to decide what other features are important to you. For instance, my camera was a little bit higher because it had the 5x optical zoom, but that was important to me for when I go to Animal Kingdom, I can zoom in and get close up shots of the animals without losing quality in the resolution of my pics. If this isnt something that you feel is important, then go with a camera which has a 3x optical zoom, and you can find one much cheaper.
EDIT - One other thing I want to mention. When shopping for cameras, a lot of times a sales person will use increased mega pixels as a selling point. Like I mentioned (and some posters before me) you really dont need anything above 5 MP, but 4MP is the absolute lowest you should go. Basically, when you are dealing with resolutions above 5 MP, the only way you are going to really be able to tell the difference between a pic at 5MP versus one, say at 8MP, is when you enlarge the pic. A camera with a higher resolution will allow you to enlarge a picture to poster size without having to compramise on the quality. Unless you plan on doing this, then I think you will be fine with the 4-5MP camera.