which is the best digital camera?  

Hmm, if you are using for personal use, you can buy a Sony Digital Camera either T77 or W series. T77 is the touchscreen and if you are used to it, then u may get it. If not, get the W series. It has a smile shutter where the camera will automatically shoot when someone smiles. It has an easy button where you can shoot in different environments namely low light situation, night shots, landscapes, sports, etc. Your budget will fit on that.

Or you may opted to get the Canon Powershot, at least it will last for a lifetime and it is more clearer than Sony.

Lastly, if you don't mind your budget (a little expensive), you may get the Panasonic Lumix LX3 which is also a point and shoot camera. This is the best camera since it has everything that Sony Digital Camera and Canon Powershot features plus it is a Leica/Lumix lens which are very well-known and very crystal clears of your photos... everything you need to take shots whether sports, landscapes, telephotos, wide angles, group pictures, and night shots.... anything under the sun.. it's all complete and you don't have to worry everything. One more thing,it is small,pocketable size, and very lightweight. Lots of my friends are using it, I am so jealous of them...hehe

hope it helps.

Yes, I also suggest you buy a 10megapixel camera. Now, that will really be a cool and high-quality camera. My preferred brand for cameras is Canon. I once tried Fuji camera but I did not like it at all because the picture quality is not that good even though it is already an 8megapixel camera. So I switched back to Canon. Canon's cameras take wonderful shots. The quality is top-notch. Canon is more expensive than other brands but it really is worth it especially when it comes to quality. I suggest you buy a Canon 10megapixel camera. You will not go wrong with that one. :)

It is a mistake to go too high with the megapixel count in a compact camera. you start to get poor images above 400 ISO with an 8MP camera and even lower with most 10Mp cameras due to "noise".

For parties and other low light situations you want a camera that recycles quickly after you take a shot and that works well in low light: Canon and Panasonic rate very well in this respect. In fact, while many cameras have useful features, the best cameras in your price range are Canon and Panasonic. Next best are probably Nikon and maybe Sony for the kind of pictures and money you are talking about... at least that's the way the independent reviews generally rate them.

Try CNET.com and DPreview.com to compare the ones you like the look of.