Am still checking up on cams, and after checking out Ricoh R1V and R2; I want to go for image quality. So, thot of checking up on the compact ones (Ricoh is still considered ultra compact; though it is big when it comes to Compac IXUS 50).
Canon Powershot S1 IS shows up as one potential dig cam. With 10x optical zoom; 3.2 megapix. Its successor which looks really cool is S2 IS; which has got 12x optical zoom; 5.0 megapix. The close competitor is Sony Cybershot DSC-H1. Here's a comparison.
There are other models too which I have to check once I go to simlim again. Probably, if costs okay; I may be carrying a camera on my neck rather than in my pocket ;).
here is a photo of moon taken from Canon S2 IS using a converter.