Tom,
I'm going to slightly disagree with some who are telling you you should and need to spend as much as you can on a camera. I think your budget of <$500 is smart, but I think you could easily cut your budget just about in half.
Two sites you could easily go spend days on are, as mentioned before, www.dpreview.com and another is http://www.imaging-resource.com/
Both great sites with great reviews, content and links. I think I find a few more price options on imaging resource.
Just a little background on my opinion. I AM NOT A PHOTOGRAPHY EXPERT. Wanna talk pens? Along with MANY here, I could be called an expert. Wanna talk turning in general? I know just enough to get myself in trouble. In fact when it comes to manual photography I know almost nothing. When I was looking for a new camera a few months back I asked a current business partner for advise. I gave him details on what I wanted to be able to do and what I wanted to spend. This partner knows his stuff. Google Scott Breen Photography and you'll get over 150k hits on this guy.
I was seriously looking at a couple Kodak models because they were going to save me about $50 and seemed to have very near the same features of other brands. He said no, never, don't even think about it.
He said look at Canon first, then others, Nikon, Sony, Panasonic, but not kodak. He says Canon is the actual oem manufacturer for the sensors used in most digital cameras made today, so why not go with the standard.
Ok, on to some suggestions.
#1 Suggestion Canon S3 IS
This is the camera I ended up buying. It's an amazing camera that for me bridges the gap between big, expensive, technical digital SLR vs pocket size handheld point and shoot cameras
For pens you have a great macro as well as a super macro setting that can take photos of things literally touching the lens. It's easy to do some manual white balance adjustment and more manual control in various modes than I will probably ever use.
But, get this thing away from your light tent and it's a joy to use with the super zoom and image stabilization. Great candid shots of family when they have NO idea you're shooting them from clear across the yard, etc.
A bonus to this camera is it's ability to take decent video. I have not taken out my camcorder since we got this camera. Digital video a decent resoloution, stereo sound and it zooms and focuses during video shooting. One touch button to start video in whatever mode you are in. Really cool feature, and the reviewers say it's the best or very near the best video from a still camera out there, I believe them.
Canon is just now coming out with a S5 IS that is a few more megapixels, but basicly the same camera. I can't see how more than the 6.something the s3 has will improve it much. I don't really agree with the "more megapixels is better" thought. I lived with a 2mp camera for years and this 6 is a great size for me right now. So, with the new model coming out, the s3 may be dropping even more in price in just a few weeks. I got mine around September for about $260 and you can pretty much get the same deal, maybe a little better now.
Oh, and I almost forgot the flip out, articulating lcd screen on this. I use it all the time for overhead shots and sideways shots. Again, you turn the sound off and no one even knows you're clicking away at them which for me usually means great real life shots, not posed.
Suggestion #2 Whatever deal you might be able to find in the Canon powershot sd xxx line.
We have an sd600 that Scott got us for work to take videos of customers and it takes nearly as good video as my s3 does,amazing for a little point and shoot camera. It has quite a bit of possibility for manual adjustment and a decent macro setting. An amazing camera for the size. I just looked up some prices on the sd600 we have, which is a model or two behind whatever is out now, (meaning it's 4 months old ) [
] You might get a better deal with a few more bells and gadgets on a current model. But I'd consier anything back to the sd420 model. You basically get the same unit with ramped up or down MP.
So, for about half your proposed budget you can get either an amazing zoom camera with great macro and image stabilization or a pocket size camera with average zoom, good macro that still takes great pictures.
There you have far more than my 2 cents worth.
good luck and have fun deciding.
PS, don't forget you will need a bigger sd card. I use a 2 gig in my s3 you can get one online for under $20
