What should you look for when buying a digital camera?

how many megapixels it has (I'd shoot for 4 or more) and how much the optical (not digital!) zoom is (I'd go for 3 or more) also what kind of batteries it uses (AA's are crap and die right away) you may also want to look into what kind of memory it uses and how much it would cost to upgrade to a larger memory card. that should give you a start anyways...those are some basics...you just need to decide what features are important to you (movie mode, sound clips with pics, b&w, etc...)

Depends on how you plan to use it. For pictures to be enlarged to 8 x 10 or close-up cropping get a 5mp or more so the pix don't get "grainy". You can always set to a lower resolution for your everyday pix. Most digital cameras have both digital and optical zoom. Cameras with more optical zoom will have a better lens.
For first time users, get something simple and inexpensive. Kodak "easy share" is good. I have a Nikon 7mp that I am very happy with.

canon rebel 350 xt. i've been researcing for weeks, seems to be the best thing under $1000. i have a sony 3.2 megapixel, good pics but took 45 seconds between shots...i like that the canon can do 3 per second and blow up photos to 11x14 or bigger.

Optical Zoom (DO NOT look at digital zoom)
Megapixels
Refresh rate
Are there lens accessories available?
battery type
# of modes (automatic PLUS Manual).