I have this fantasy about little cameras. And by little cameras I mean point and shoot stuff. Anything from the camera in my iPhone to a little tiny $129 Powershot to a G10 (in the Canon world at least). I always think that I'll actually use one if I have one. Then I buy one and it sits in my closet until it's completely outdated. It's sad really.
My friend Meg bought a G10 last month (she seems to like it, we'll have to get her to write up her thoughts.) and I've gotten to play with it a bit. The screen is nice, the size and weight are more Canonet than you'd expect in a modern camera, and that's a good thing mind you. It's got good physical detented knobs for a lot of functions, including exposure compensation right on the top left. -2 < > +2 Sweet! As you can see, I lust for it.
In the end however it's got the same problems that all such cameras have. I don't shoot like need you to. That is, in good light, at lower iso, or with a flash. Those are all limitations of the size of the sensor (smaller than your pinkie) and their type (CCD). Maybe I have to stop thinking about them as a replacement for bigger more capable cameras and instead shoot to their strengths. I've tried this once or twice, usually get back home and look at the images on screen and think, "Man I wish I had my 5D on me instead". I'm just not a 'see a cool thing on the street and snap a photo of it" kind of photographer.
Those little Sigma cameras are pretty sweet looking. But a 4MP Foveon image just isn't enough for me no matter now good their adherents say they are. I'm even cool with the prime lens they've got permanently in place. It's the $600 price that turns me off as well.
There's rumors of Nikon or Canon coming out with a CMOS (that's the good kind of sensor that's in most modern DSLR) which could give much closer to dSLR performance in a smaller package. When we can get Rebels and D40's for $550 on sale, the manufacturers really need to think about getting a nice camera in the $400-$500 price range that doesn't have just as many limitations as the $125 number.
From the research I've done, it's Panasonic that holds the camera to get title in this category, I think it's called the LX3. Apparently it's got lower noise and a faster lens (f/2) that it's competitors and doesn't try to push it's megapixel rating for the sake of marketing. I think it's 10MP. Plus it's got modes to shoot 16x9 and I think 4x5 ratios, plus RAW.
It's funny, a lot of the time when I want to have a camera with me when I'm walking around, I choose my 40 year old Leica M4. It's bigger than a point and shoot for sure, and you've got to carry a meter with mine, but I'm not skimping on image quality. On the contrary, you might say that I'm gaining quality. That led me to think about a used M8, but the cropped sensor just pisses me off, and it's too rich for my blood anyway.
To be sure, I see images all the time taken by people who use a G9 as their main camera and they're gorgeous. Makes me massively envious that they can do so much with them and I can't. Maybe, that's the reason for having one. Like a cyclist training on one of those one gear direct drive bikes. Limited, and hard, but massively efficient if you want to get better faster.