Canon PowerShot S95

I like this little camera. In broad daylight, the photos are great. Indoor or low light still photos look quite decent, good enough for memory book and regular prints, though not as good as my D-SLRs with fast lenses (but that cost 10x more). For low light still photos, the auto mode and Aperture priority mode work quite well. I use the Aperture priority with flash, along with f/2 and higher ISO, for the Las Vegas and Disneyland New Year Eve party photos. Both the people and the background lighting came out fine. The indoor Small World holiday photos (without flash) turn out pretty well. There is some visible noise when enlarged but good enough for Facebook and regular size prints. There is no spot metering, so brighter background lights can get blown out highlights, but this is as good as a compact can get.
It is small enough to fit in pants pockets and purse, can go anywhere you go. I took it to the peak of the snowy Mammoth mountains, party in Vegas, or hang out with kids in local venues. And will try do scuba diving with it soon (though cannot use TTL flash underwater like my D-SLR or G10). Obviously compacts will not do well for low light actions, but overall the photos turn out better than I thought.
The HD video works quite well, but for indoor video you need to change the white balance setting (otherwise the video has a yellowish tint under tungsten lighting, this is a problem for all cameras). For family video, this compact camera does not have the depth of field problem like my D-SLR (subjects getting out of focus easily if they move around).

Check out Panasonic's Lumix LX5. It offers a great lecia wide angle lens , and is virtually equal to the S95 when it comes to picture quality. And it beats the S95 in terms of HD video going away. The major downside, is that it is not as "pockitable" as the S95, although not much larger than the S95, the lens extends from the camera enough to make it harder to pocket. It really comes down to your preference. Check out both, and good luck, as I have been going back and forth in trying to decide between the two myself. I love the S95 given its slick small size, but love the much better capabilites of the LX5 in terms of its superior HD video and low light shooting ability.