I have spent extensive time in the past few months researching digital cameras, and when I saw the Olympus 510Z available for $299 on clearance, I knew it was the camera for me. If you want to hear my experience with the 510, skip to the end. If you want to hear about the selection process, read on.
I had not wanted to purchase a digital camera until 2003, since economies of scale will be much better then. But other events (a baby on the way) moved my timeline up.
I first looked into $199 digital cameras, of which I found a few like those by HP or Polaroid. Both are poorly rated in Epinions and CNET, primarily for noisy images. Fuji offers cameras which are $100 less than many of the major player (e.g., the Fuji 2600, which is $299 versus the $399 for the comparable Olympus 510Z). Again, noisy images in low light, and poor low-light sensitivity, were cited.
I have also kept my eye out for clearances, where your best deals are. I bought refurbished 1.3MP Fuji cameras for my Mom and Sister, who were looking for entry level cameras - they were only $140, and they've been relatively happy with them. I also almost bought the 2.1MP Nikon 775 (regular $399, $299 on clearance), except for the terrible color fringing in the test pictures on my favorite camera web site: www.dcresource.com. Presumably, this was due to poor optics, at least in his test camera.
Okay, so finally, getting back to the Olympus 510Z, they dropped the price from $399 to $299 to clear them out. I bought one, and took it home. The LCD display worked, at least well enough to say "no memory" before you'd inserted the memory card, and "no picture" after you had. But the lens did not extend once the door was opened, none of the setup menus were accessible, and none of the other functions worked as advertised. I tried three different sets of batteries to confirm that this was not the problem, and read both the quickstart and full manuals twice to make sure I wasn't doing anything wrong.
I took the camera back to exchange it for a working model. The second one worked exactly like the first: no functions worked other than the "no picture" message. I got one of the store personnel to examine the camera to make sure I hadn't overlooked anything (he sets up a lot of the demo models on the floor). They also tried other batteries, and concluded the second one was also indeed defective. We went and examined the demo model, to confirm that we understood how a working model was supposed to operate.
From this, I can only conclude that Olympus has some quality problems, and may not do 100% testing leaving the factory. My recommendation is if you buy a camera, and live more than 20 or 30 minutes away from the store, it might be worth testing before you leave the parking lot. It should only take a few minutes to set up most cameras. Always make sure you go through a thorough check-out of all features before the return policy expires, including downloading to your computer. And check out the store's return policy carefully. I won't buy from stores that tell you a DOA is "between you and the manufacturer" once you bought it. If it didn't work out of the box, they had better either give me a good one, or give me my money back.

P.S. - I ended up buying a Canon Powershot S30 in the end, and love it - it was twice the price, but as a newer model has many nice additional features.

Recommended: No

Amount Paid (US$): 299 + tax