Capture escaping in both still and video shots in this small package, the Casio Exilim Hi-Zoom. The camera's less than an inch thick, yet despite great 7X optical zoom on a camera this size, the lens doesn't extend any further from the camera than it currently is. It takes 7.2 megapixel stills, and captures high-quality video with next-generation H.264 encoding, allowing the user to take 1.5x the MPEG-4 video as before because of the compression ability of the encoding--with a 2 gig SD card, that's up to 3 hours of video.
According to the product's website, it comes with an LCD that's 3x as bright as past models, which makes taking shots outside much easier to see. Also included in this small package is Casio's CCD shift technology, which mechanically reduces blur, and Anti Shake DSP, which reduces blur due to shaky hands or a moving object by using faster shutter speeds and a higher ISO sensitivity.
It's available through Amazon for $235, reduced from the suggested price of $299 that Casio recommends.