Pete, you love those Pannys now don't you
I recently got an FZ7 for someone at work (slightly newer than the one you suggested), it's about 2/3 of the size of mine yet has the exact same 12X zoom and full manual controls, couldn't believe how good it was for the size and price.
Panasonic TZ1 ("Tizzy") if you want something compact, awesome camera which just demands that you take pics all the bloody time. Everyone I know who has it absolutely loves it, well under budget too even with a few 1GB SD cards. It will control everything for you so it won't be complex, and the 10X zoom will be a revelation if you've only ever used "normal" cameras before, you can get so many shots that aren't normally possible.
Hundreds of sample shots on this
forum and a decent review
here
http://www.ukdigital.co.uk/panasonic_digital_cameras.htm are very very good for buying cameras, they supply actual UK stock as well (many companies supply Europe/US versions, nothing wrong with that but most people prefer a UK version)
Whatever you buy don't get lured into a bundle deal with memory (especially from an actual store), it is now unbelievably cheap online at places such as Ebuyer, cards that cost £100+ in Argos are available for £20 online.