OK folks. I went into DIXONS today for some advice on buying my new digital camera and ended up buying one from them. It's an Olympyus muju u410 with the following specs:

Weatherproof metal body

4 Mega pixels

3x Optical zoom

8 scene programs

Movie function with sound

32MB XD Card

Rechargeable Li-Ion Battery
It set me back £145 which was over my budget (but i've done loads of overtime recently) but very reasonable.
I also ended up buying 4 years of warranty for another £49. I usually never go for these extra warranties, but this covers against accidental damage too, there is no excess if i do have to claim, and if it needs replacing dixons will give me vouchers for the full value which i can then get whatever camera i want - so if it breaks 3 1/2 years down the line, I would then be able to get a newer model (prices are dropping and features increasing) which would be better.
I will issue a small review for you all in the user review section, once i have tried it out, and let you know how i get on with it.