My wife is looking to get into photography a bit. Nothing professional, just a step up from the average. I/We know squat about cameras.

We've been looking at a Canon S3 IS. It's on sale right now for $319, so that's about the price range we're looking at, and of course adding a good SD card.
Canon S3 IS

Looking at it in the store, it has a lot of features, amazing zoom, and fits her hand good. 6 mp seems low compared to some others, but megapixels aren't everything, or so I've been told?

Comments, suggestions?