H.S. wrote:

You might wanna take at look at Canon A570 IS (should be around $150
from BHVideoPhoto web site). It is 7M pixel camera, manual controls
included and has optical image stabilization. Next, check out the Canon
A720 IS, same as the previous one but 8M pixels. Both take 2 AA sized
batteries.

There are more differences between the A720 IS and the A570 IS than just
the resolution.

The A570 IS has a 35 - 140 mm lens, while the A720 IS has a 35mm - 210
mm lens. The A570 IS is a better choice in terms of image quality, with
a better lens and less noisy sensor.

However, for a purse camera, maybe Canon SD1000 or SD800 would be even
better. There are ultra compact cameras but have proprietary batteries.

The SD800 IS is a better choice than the SD1000, IMVAIO. Larger pixels,
wide angle lens, and image stabilization.