Casio Exlim EX-Z750
We got the Canon SD-500 and it is great as a 7 megapixel camera. There are just three problems with it, it has relatively short battery life, there isn't an aperature or shutter priority so you can't take sports shots well and given the kids use it, it would be nice to have some anti-shake technology to get more shots.
Both of these issues are fixed with the "Exlim EX-Z750":http://www.dpreview.com/reviews/casioz750/. The tradeoff is that the menus are much harder to figure out as noted by "Digital Camera Info":http://www.digitalcamerainfo.com/content/First-Impressions-Casio-Exilim-EX-Z750.htm, the flash is tiny and you have to take a docking station with you when traveling. Plus, the basic settings for saturation, sharpening are too high.
But on the other hand, it has high image quality, shutter priority so you can take unusual shots, it has anti-shake and a really beautiful 2.5" screen for showing off your photos. Plus, the battery is double the Canon.
So, net, net, I agree with its net, net, the best compact camera out there for serious photographers who want lightweight.