High Sierra Topix

I'm in the market for a new digital camera. I'm strictly a "point and shoot" kind of guy, so my criteria are pretty basic -- small/lightweight, decent zoom (I know most are optical 3x -- how much difference does 4 or 5 make?), good picture quality, but basic basic basic. Also, does image stabilization actually do what it claims? One of the cameras the camera store was pushing was the Canon SD850.

I'd love any advice/suggestions, thanks.

This site has plenty of reviews for digital cameras,
http://www.steves-digicams.com/.
I use a 'old' Olympus 755, 10X optical point and shoot, without image stabilization. The camera is generally so fast, rarely under 1/250th in daylight, that camera shake is not an issue. The zoom is great for pictures of subjects that normally can't be closely approached.. wildlife, and the macro settings are essential for wildflowers. The tradeoff is in camera size, it's not shirt-pocket size, and it takes a second or so to get itself powered up and focused, and the autofocus sometimes has to be coaxed onto the subject I want.

My wife took this image with her Fuji S5700. auto mode point and shoot.
It has image stablization also.

The Canon 850 IS is a good one. I just bought my wife one a couple of weeks ago. It's sweet. It's tiny. But it has a large LCD on the back which makes viewing the image very good. It's also 8 MP so if she so desires she could huge prints out of an image.

Most digital cameras these days take good pics. Personally, I would get the highest zoom I could afford and still be happy with from a size standpoint. Also look at battery life and what kind of memory card it has. Some of the memory cards can be expensive. Being able to look thru the viewfinder is important to me because sometimes the screen is washed out due to lighting conditions. http://www.dpreview.com/ has good reviews.