do your research. there are many great websites. not all cameras and not all companies are created equally. after having purchased a sony, a nikon and a canon point and shoot, i'd definitely recommend canon. but there are a zillion diff canon p-a-s. you gotta to the research.
and lastly, all dig cameras break. that is a law. as such, definitely get the service plan. i know they are a scam for other products but for a camera, definitely worth it.
I second the Canon. I've had a couple, and they are good quality, easy to use cameras. It would be hard to do better than these.
I don't know about needing the service plan though. The only times I've had them break were due to my own personal screw-ups, i.e. forgetting it's in the pocket of my bathing suit and then sitting in a hot tub (I might have had a beer or two). I think that as long as you buy a decent camera and take good care of it, it should last for a while.
Hard to beat Canon virtually across the board. Other vendors have good models, but generally not with the consistency that Canon does. I've had various Canon Elphs and couldn't be happier. Check out the SD870IS. It has image stabilization which is a big help and has a wider angle lens than most PaS cameras. I tend to find that wider angle lenses are more useful than more telephoto lenses in PaS picture-taking situations. In any case, check out the Canon Elph line.
I bought a Cannon A720IS recently and have been pretty happy with it. I got it at Sams for $200. Here is a review of it from the dpreview website. BTW, dpreview has good info on most of the models that you may condsider.
another fan of the Canon Digital Elph series. very point-n-shoot friendly (handy for my wife) w/ enough manual settings to allow someone w/ more photographic experience to tweak & customize the shot (handy for me). image quality is generally very good to great depending upon how much you spend.
i'd personally caution you to think twice before buying a sony. they're reliance on proprietary memory makes them more expensive over the long haul.
Another nice "feature" of Canon digital cameras is the availability of very useful hacks at this site. The hacks reside on your memory card and don't change anything in your camera so no warranty issues. Amazing what the hackers have managed to add to an already impressive line of cameras.