While outside of the price range, it might not be for much longer. I am in love with my panasonic G3. Like others who have menitioned micro 4/3 format, technology has made m4/3 more than just a middle-of-the-road choice between point-and-shoots and SLR.
For a casual photographer, it provides an immense toolset to improve and learn, without being intimidating. I opted for the G3 because viewfinders are quite nice (regardless of digi vs optical) for bright situations, or also fully zoomed on the larger ranged lenses.
Favorite Lens? f/1.7 20mm prime. This, coupled with the fold out screen, makes macro shots from various angles quite easy.
I saw the GF3 for $300 on a one-day amazon deal the other day. You lose the fixed viewfinder (can hot-shoe one i believe), but retain the sensor and most features. To keep price point in check, 1-generation old cameras are where to start usually...
Good luck in your pic(k)s!