I recently bought a Canon Digital Rebel XT, cost me just a bit under $600. The standard lens kit seems to be pretty good, I was taking pictures at 8mpixel at the F1 race this weekend, and it got me really good pictures with the 1/1000s time exposure method. Since this camera has a lot more options than my previous older digital camera had (which for the most part only had a bunch of presets rather than setting adjustments), I've learned how to take better pictures and adjust most of the settings and such. For me, I wanted something really good for my vacation and it looks to have a good job.
The camera I have is probably too much for your needs. I've seen there's a much cheaper Canon S3, I believe this one may have removable lens as well.
My main advice is to buy a camera that has adjustable settings like shutter speed, aperture, focus and such and it would be a good future proofing to have removable lens too. My old camera, some sort of digital Panasonic with about ~2.2mpixel or something like that, most of the time the pictures I was taking were not as good as they could be since it only had preset modes and you'd select one of those and only able to choose ISO setting, that was about it.
Anyway, you can take a look at some pictures I took with my new camera here:
https://www.gtplanet.net/forum/showthread.php?p=2686587#post2686587
Also an example of where the new camera really came in handy:
I was pretty far from this car. This is basically cropped by a large amount over the regular picture, and with the zoom at maximum. If you compare this to some pictures that I took last year at Nurburgring GP with my old camera, where I was sitting much closer to the track (probably around 5+ times closer, anyway it was pretty much right near the track, whereas this year it wasn't like that).
As you can see, the much higher resolution and better lens of the new camera did a better job even though I was sitting much much farther away. It also came out clearer since I was using a manual set shutter speed and other little settings, whereas with the old camera I
had to experiment with some presets and choose one that came out OK (most of my photos were blurry by the way).
So whatever you buy, get something that you can adjust settings and such.