I've been involved with photography since the early 80's. In today's fast moving digital environment, like computers, the same day you buy the newest, brightest technology something new is already on the assembly line. The good news is that cameras, unlike computers, will last for many years of reliable service if well maintained. I still own the original camera I purchased in 1981, a Canon AE-1. Of course it was all film back then and comparing cameras was a lot easier.
Since you're a beginner, it makes sense that you'd want a camera that's not going to cost you to much, but will perform at a semi-professional level. There are many to choose from. Let me warn you right up front that you don't want to get caught up in the mega-pixel game. It's not how many mega-pixels you have but instead, just like film cameras, it's about how much light you can record and the number and size of the surfaces that are going to record it. You can bet that the cheaper cameras may SAY they can record 10 mega-pixels (and they do). But the surface they're recording on is so small they can't gather much light. So first, if you're serious about taking fantastic pictures you need to start with a camera that has a large CMOS sensor. All of the mainstream DSLR Cameras have large CMOS sensors. All of these companies also make smaller, less expensive models but still maintain the quality of the large light collecting capability.
So how many mega-pixels do you need? I believe that for the beginner, or semi-pro photographer, 8 High Quality Mega-pixels is more than sufficient. This type of camera will provide ultra-high quality prints up to about 11 x 14.
Just as important as the mega-pixels is the quality of your lens. I would recommend that you NEVER buy a camera of any kind with a fixed lens that can't be interchanged with other lenses that are better suited to the type of picture you're taking.
I'd also recommend you take a look at a photography course offered by most local Community Colleges. This is a small investment in the skills that will pay you big dividends in the long run.
Now to answer your question. As I stated in my title above, I think you should consider purchasing a high quality used DSLR. The advantage of buying a used outfit is that you'll have enough in your budget to buy a decent lens or two, a good quality camera case, tripod, and some filters to get you started off on the right foot. I can personally recommend two possibilities in your budget range. The Canon Digital Rebel XT is a great starter camera sporting a high quality light sensor, interchangeable auto-focus lenses, and a program mode for the times when you don't want to have to think too hard. You can find fully outfitted kits available on sites like ebay, well within your stated price range. Another, more professional camera made in this time-frame was the Canon 20D. This camera takes up to 5 frames per second and has all of the bells and whistles you could ever ask for. It is also 8.2 mega-pixels using the Canon Digic II sensor, which was the state of the art 4 years ago.
The big advantage to buying a camera that was $2,500 four years ago is that the people who are selling them are upgrading to the newer, faster technology. Of course buying used equipment should be approached carefully, and you should make sure the seller is well rated and the warranty provides you enough time to put the camera through it's paces.
Amangrulkar, I hope this information is helpful to you. I know you won't be disappointed if you go with the pros. That means Nikon, Canon, Minolta, Pentax. One poster recommended Sony. I can only say that Sony has a reputation for great video gear, but they have never been in the forefront of camera gear. Just a side note though, Sony does manufacture the CMOS sensors for many of the Canon cameras. They're developing one right now that will pack 50 Mega-pixels on the size of a DSLR sensor. I'm pretty sure that one will be out of my price-range.
Good Luck and,