I've got an Olympus D-490 a couple of months ago and this camera is wonderful. I haven't used my 35mm since. The higher the megapixel the better the picture resolution. Mine is 2.1 and I have gotten some of my pictures developed online and they look as good/better than pics taken on film. It uses lithium batteries or regular ones, but the lithium lasts longer. I have yet to replace mine and I use my camera all the time. Right now I've seen the price for this camera around $449 down from $500.
However, there is the Olympus D-460. This camera does basically the same as the 490, but it has a lower megapixel 1.3(but at this resolution the pics still come out looking film like and not digital). I bought the 490 over the 460 because it has a movie mode feature and for the higher megapixel. But if you just want a nice digital camera and you don't want to get all Steven Spielberg with it, I'd say get the 460-the cost now is around $299.
Now mind you I got this camera about 6 months ago, so my info may be outdated considering manufacturers make a new gadget every 2 minutes.
I also got the Photosuite editing software to edit my photos and I've done all types of effects with my pics. But my friend uses Adobe and Corel and those work just as well.
Cons:
1) The 460 and 490 have serial port connectors for downloading pics. Most newer computers mainly the MACS have USB ports. I just got a new computer and it has both so I'm covered either way. You may want to know which type of port your computer has when buying a digital camera.
2) The Olympus only holds about 40 pics on it's memory card (standard mode). You can use a lower mode which gives you more pics per mode, but the pics are a lower resolution. pics. You can buy a higher memory card to store more pics, but if you download your pics on your computer then you won't need to buy a higher memory card-plus they are expensive.
Pro/Con
1) You can delete your pics. If you don't like it, erase it and take it over again. This can be hazardous especially if you like to take pics. I've been know to take numerous pics of myself- because it's got a self-timer- over and over and over and over again until I get it perfect. You don't get that luxury with a 35mm.
I like electronics and have too many that I know what to do with. Usually when I'm looking for a new gadget I go to amazon.com, consumerrepots.com, or bestbuy.com and pricegrabber.com to look for product info, prices and reviews.
I hope this helps and happy hunting.