At 2Mpixels, you're looking at a 1600x1200 resolution...that will most definitely meet your needs and more! I'd recommend the Canon Powershot A20 or the A40. Both have decent optical and digital zoom and camera people rave about it.
It can be had in the us for $200 (or about £122). Here is a link to it at a US site. If you can get it cheaper after shipping and VAT from the US (you're looking at about £20 to ship, I would venture), I would do it. Stuff is just less expensive here, and it only takes a few days to get to the UK anyway...
By the way, do you think the VAT will last long? Aren't people just up in a rage about it? If I were you, I would invade a ship full of electronics in the middle of the night dressed as Indians, then throw the electronics into the ocean! That'll teach em.
Definitely a Canon Powershot like HandyBuddy suggested. I've got the S30, which I bought a year ago for $450, and I absolutely love it! The design of the Powershot cameras is very nice, and the features are very impressive. A great resource for deciding on a camera is The Imaging Resource. You can find very extensive reviews for many cameras, along with photo samples from each of them.
Ep, glad to see you come back and tidy up...did want to ask a one day favor, I want to enhance my resume , was hoping you could make me administrator for a day, if so, take me right off since I won't be here to do anything, and don't know the slightest about the board, but it would be nice putting "served administrator osnn", if can do, THANKS