I'd recommend the Canon SX1 IS or the SX10 IS a 20x Zoom of very good quality 10 MP and the added bonus of it being a full HD video recorder. It has all the controls of a DSLR, but can still be used in program mode for someone who knows nothing about photography.
Steves digicams review is
here The conclusion:
Bottom line - Canon has produced one awesome digital powerhouse, that can be used by anyone! The SX1 is a perfect 'bridge' camera that fills the gap between consumer point-n-shoots and entry-level dSLR systems. While the price is close to a dSLR kit, there are several features you will not get on most dSLRs at this price point, like the 20x optical zoom, image stabilization, a 2.8-inch articulating LCD, full HD movie mode, etc. This model offers outstanding performance in both single and continuous capture modes as well as awesome image quality. The CMOS image sensor is a welcomed addition compared the the CCDs used in past models, and we Love the new 1080p HD movie mode. The SX1 is sure to be a very popular model in the coming months (or years), and we have no problem giving this camera our highest recommendation to anyone who is torn between a consumer or dSLR unit. With a street price of US$599 or less, we feel the Canon PowerShot SX1 IS offers an outstanding value for the amount of control, quality and features you are receiving.