
If you want a solid camera with a lot more oomph than a point-and-shoot without the bulk of a DSLR, I'd recommend the Sony NEX-5N.
In fact, it's so good that I'm moving it to the top of the leader board, replacing the budget DSLR, the Canon T3i.
(Last Updated September 17th 2012: Olympus has just unveiled two new, affordable Mirrorless cameras. The PEN E-PL5 and E-PM2 which will set you back $700 and $600...