In addition to storage capacity, there's also the speed issue to consider. SD and SDHC cards have a "Decoding Class" rating listed, which refers to the data-writing rate for each card. The higher the Class number, the faster the write speed; if you're planning on shooting video or using a high-speed burst mode, look for a Class 4 or Class 6 card at the very least.
To complicate matters further, there are a couple of other formats out there. Some cameras support MicroSD or MicroSDHC cards, a smaller version of the SD card format that isn't compatible with full-size SD slots. Older Sony cameras take MemoryStick cards, and older Olympus cameras use the XD card format; both companies' new cameras now support SD/SDHC cards. If your camera accepts multiple memory cards, it's best to go with the standard SD/SDHC options, as you will more likely be able to use that across various cameras, and future camera purchases.
Software bundles: Almost all point-and-shoot cameras work with Apple’s iPhoto or Image Capture software for importing pictures from the camera. You can also access the memory card using a card reader, and use the card like you would any other storage device.
All cameras come with software, but the included Mac software is often outdated. You’re better off using iPhoto, Preview, or ImageCapture to manage your pictures and to make minor adjustments.
Video: Many point-and-shoots are able to shoot high definition (HD) video, either at 1280-by-720 or at 1920-by-1080. Most sub-$100 point-and-shoots let you record videos at 640-by-480 and/or 320-by-240 resolutions only. The video quality often isn’t as good as a dedicated camcorder, but is easy to use in a pinch. Dirt-cheap point-and-shoot models don’t usually offer this feature.
Often, you can download the recorded videos to iPhoto, and then use them in iMovie for editing. Some cameras may require a QuickTime software plug-in before you can watch the video.
The camera you ultimately decide to go with depends greatly on your budget and which features are most important to you. Here are a few recommendations to get you started.
Advanced: Canon PowerShot S95, $400; Panasonic Lumix DMC-LX5, $500; Nikon Coolpix P7000, $500; Canon PowerShot G12, $500; Olympus XZ-1, $500 (See a list of the current top-rated advanced compact cameras)
Pocket megazoom: Sony Cyber-shot DSC-HX5V, $350; Nikon Coolpix S9100, $330; Fujifilm FinePix F550EXR, $350; Canon PowerShot SX230 IS, $350; Samsung HZ35W, $350 (See a list of the current top-rated pocket megazoom cameras)
If you have your own recommendations, leave them in the comments!
[Editor's note: This is an updated version of a previous article to reflect changes in the camera market and include our latest recommendations.]