there is a great thread discussing this on the ophthalmology forum. Also, check the U Iowa Dept of Ophthalmology website for a great review of the topic.
I have the Canon S30 and while it's been great to me over the years, it's a little big and heavy. Tough to carry around in a pocket - and I feel that if you don't carry your camera around all the time (and if it's not easy to do so), you just won't use it.
if you go thru slickdeals.net, you can get a Sony DSC-T7 Cyber-shot 5.1MP Digital Camera for $351 at Dell (usually 450-500). why i specifically recommend this camera is because it allows you to actually take photos straight from a microscope. the lens is not externally telescoping, allowing you to lay the camera lens flat against the microscope's eyepiece to take phenomenal pictures. huge lcd display.in derm, it's great for close macro shots in clinic and for dermatopathology.