I'd be the first to say that I'm prejudiced, since I own a Fuji myself, but considering your stated budget, the new Fuji S6000fd might be a good fit for you. It has a very good zoom range (28mm-300mm in 35mm film terms), above average low light capability (up to ISO 3200, although 3200 is probably next to unusable), decent flash, 2.5" LCD, and Fuji's face detection system. Downsides are size/weight, lack of image stabilization and use of less common and more expensive XD memory cards.
Many on this board also love their Canon S3-IS and S2-IS cameras, and the Sony DSC-H2 might also be worthy of your consideration.
None of the above are small, "put it in your pocket and go" cameras, though, owing mainly to the zoom range, so if you are looking for something pocketable, you might not be interested in any of these. Canon's SD700IS might be a better choice in that case.
For starters, you might want to play with this little tool, to get an idea of what your options are:
http://www.dpreview.com/reviews/compare.asp
Lastly, don't get too hung up on megapixels. I have made very good quality 8X10 prints with pix made with my 2MP camcorder! Honestly, 5 or 6 MP is likely all you will ever need, unless you plan on making murals.
Good luck with your search!
~YEKCIM