Well just because it's 5 megapixels doesn't make it a bad camera-- just as 12mp doesn't necessarily make a good camera either. More megapixels you fit onto a point and shoot sensor more prone you are to noise anyways.
Just to make things easy on you, here are a few suggestions:
Panasonic TZ5. It's a year old, so its price has gone down from 350 to 200 dollars. At one year old, it still competes and tops most new point and shoots today on the market, in terms of color accuracy and camera functions. It has a 28-280mm 10x optical zoom lens, and has impressively low distortion at tele and wide angles. Other features are hd video, intelligent auto, 15-60 second shutter speeds and burst shooting.
Fujifilm F30d and F31d. Though they're years old, they still outmatch almost every other point and shoot on the market by a broad rang in terms of picture quality-- especially in low light. They're very compact to boot. You'd be hard pressed to find one cheap in the current market, as they're still very sought after point and shoots. The Fujifilm F100d is said to have same principle design as F30d and F31d, so you may want to look into at as well, though you could be easily dishing out 400 dollars.
