One of my best friends, Danny, is looking for a digital camera.  I decided to hep him and did some research.  Here are a few of the cameras that I like.  I put * next to the ones I really like.

SLRs
Canon XSi (Kit)
Nikon D90

$200 +
Canon PowerShot SD960IS (Successor to my current camera Canon SD880IS)
*Fujifilm FinePix F200EXR (I wanted this camera last holiday season, but it didn't come out until spring.  I ended up getting the SD880 for Christmas.  Also price drop!)
Fujifilm Finepix F70EXR

$100-$200
*Canon PowerShot SD1200IS(Very popular)
Panasonic Lumix DMC-FS15
Panasonic Lumix DMC-FS25

< $100
Fujifilm FinePix J28

Here are some reviews from other people
Steve's Digicams
About.com
CNET

And for memory cards, I recommend Transcend SD cards (4 GB, 8 GB, or 16 GB).  They are generally cheaper than other brands, and just as good (make sure you by a Class 6 for faster speed).

If you need MicroSD, check these out instead: 4GB, 8 GB .  <-- Chris this is for you