My decision list (no nominations!) is driven by the following thoughts:
1. Picture quality IS important, so the lens counts for more than the software.
2. "Electronic zoom" is only useful for examining picture details in-camera. It does nowt for the real picture. Optical zoom is a must - the more, the better (don't always have to use all of it).
3. I have bad (very bad) eyesight, so a viewfinder is not much help, a big screen shows me more.
4. Because I have to hold the camera away from my head (see above), it tends to shake more than being held against something solid (yes, my head!) - so "steadying software" is a big advantage.
5. More MP = more money but it depends on how/where the picture will be viewed: 5 MP gives good quality on a 19" screen or A4 sheet; anything bigger or cropped-and-filled needs more pixels.
6. Technology is improving exponentially - today's "state of the art" is tomorrow's "out of the Ark" - last season's cameras may be a bit cheaper but will lack so many features. SD cards have increased in capacity and prices have fallen through the floor ... you can get 8GB cards now for less than the original cost of a 256MB. (In a few weeks, that will be 128MB.)
7. Stick with the "known names" for cameras (Olympus, Nikon, Canon, Minolta, etc.) rather than film or technology manufacturers. They tend to know what is really necessary for photography, instead of wonderful sounding but trivial features.
That's my two-penn'orth, anyway. Hope it helps to whittle down the list of possibles.
Once you have a short list of two or three, go into Jessops (or wherever) and ask to hold your choices "for comparison" - you may well find that one camera "just feels right" (or very wrong) before you pay out those all important drink vouchers. (You don't have to buy in Jessops, say "thanks, I'll go and think about it" and buy the best deal you can.)
Good luck.
