I have a Nikon D70 and a good assortment of lenses which I enjoy. However, it's not exactly the easiest camera to pocket and take around easily.
Yesterday, after a good bit of research, I just ordered the Nikon Coolpix P4, which is 8.1mp, 3.5x zoom, 2.5" bright display, VR (vibration reduction system), and it is starting to get decent reviews (It's pretty new). Plus, it supposedly does a decent video mode. I also ordered a fast 4gb card for it as well. That shouod get me close to an hour of video or nearly 700 full res pics.
I think it, or the newer canon point n shoots (with image stabilization) are the best way to go at the moment, for compact digicams.