Hey
I was in your shoes a week ago. Here's my thoughts.
I checked out a lot of forums over the past 2 weeks, really digging their archives. I narrowed my search down to the Canon G or S series. As you know the G series has been discontinued. The general consensus is that they're such great cameras that they're hurting the sales of the DSLR. I think it's the same with Olympus discontinuing the 7070.
Anyway, the 4 cameras i was considering were, G5, G6, S2 and S3. My priority was always gonna be image quality and from what i've read, the G series offered better quality pics. Also, they allow you to capture images in RAW. The zoom isn't a big deal for me. I can always crop images. The macro function of the G series is superior to the S. Also, it's a smaller camera.
One thing to consider is the batt and storage card. The G uses prop-batt and CF card. The S uses AA and SD card. I would have liked the AA actually but it's not too big an issue. I bought an extra charger ( home/car ) and batt on ebay for $12. The sandisk Ultra 1gb card cost me $50.
So my mind was set on a G series, either g5 or g6. I decided to go for the g5 in the end because of budget. G5 is around $200-$300 on ebay while the G6 is $350-$450 on ebay.
Lastly, also do some research on the Canon Pro1. I think it has been discontinued but can be found on ebay for $400-$500 or refurb somewhere. From what i've read, the Pro1 is the best camera before leaping to DSLR. There are a lot of comments that the Pro1 is better than the Nikon D50.
Anyway, i'm still very new to digital photography, so if there's anything i've said wrong, please feel free to correct me.
Good luck with your purchase. I'm off to enjoy my G5! WOOHOO!!!
Najib