It will pretty much depend on your budget. You don't need to spend a lot to get a really decent compact camera these days - set a budget and work from there IMO.

You'll also need to decide whether you're interested in a compact or ultra-compact. I prefer compact cameras - if it's in a travel case it will fit in a handbag/backpack/satchel, and usually will fit in your pocket if they're not in a travel case. Ultra compact cameras will easily fit in your pocket, but in my experience have fewer features, lower quality LCD and a smaller CCD (meaning lower quality pictures, especially in poor light).

I like the Panasonic Lumix FX-150 but I'm not sure if you can even get it in NZ. I also like the featuresets and quality of Canon cameras, but their compact range is too bulky IMO. They have quite a big range of ultra compacts.

Addendum: I have just noticed that the Panasonic Lumix DMC-TZ7 is available in NZ. This probably tops my list of favorite compact cameras available in NZ. Also small enough to fit in your pocket IMO. Slightly higher price point, but a VERY cool camera.

The Olympus mju series is probably my favorite ultra compacts, eg the Olympus mju Tough 8000. These are great travel cameras because they're pretty much waterproof and shockproof. There's also cheaper cameras available in the mju range.

As for where to buy - a reputable store. Buy from Harvey Norman, Bonds, Noel Leemings etc, or a GOOD online store (eg, Ascent, NOT Expert Infotech etc). Usually you don't save much by buying at Parallel Importers etc, and the savings at Duty Free IMO are minimal too. Competition is cut-throat so the big retailers are often the cheapest around.

In finding some of the links above I have noticed that Pricespy have had a huge revamp, and it's now quite a good place to search/find comparisons etc. Don't just go and buy form the cheapest people, because the shitty stores like Expert Infotech and OC Zone tend to beat everyone by a few dollars. CNet also have great comparisons of electronics goods, and I'm guessing cameras are no different, so google that.

edit: Just wanna say you can spend a lot less than what I've recommended and still get a great camera. Like I say, buy to fit within your budget.

i wont buy anything but the cannon ixus series (specifically the 850, 870 or 900 is) for compact travel cameras, they have all round awesome picture quality, simple fast easy to use and awesome battery life- they are at the more expensive end but i think there worth the money. have owned 3 myself (ive had 2 stolen) and never had any issues

Budgeted $500.

Like the mju range as I normally treat cameras etc quite badly. Can you actually trust Waterproof claims these days?

I would trust the waterproof claims - they're designed to be weather and splash proof, but when I was working at Disk Smith the rep demo'd one submerged in water while taking photos. Not covered by warranty, but it worked fine.

yea i had ppl using them in the surf and at hot water beach when i was with stray and they survived- wouldnt say they take the best pics and they have no optical zoom but very versatile

Hmmm, interesting note on pricespy.co.nz chris, just looked at it. So a random Swedish company bought it and shat out some shitty new design, it burns the eyes...

The new Pricespy design is a little overwhelming, but 100x better than the old website, which IMO was totally mickey mouse. <3 the Ajax, comparisons, etc.

Pricespy is actually useful now. It has working filters and a search that doesn't suck.

As for cameras, I'm not an expert on compacts but I've always been happy with Sony and Canon compacts that I've used. It all really depends on your requirements - do you want something with decent manual controls or are you happy with point & shoot? You also need to decide how wide/long you need the lens to be - some compacts really can't go very wide which can be a pain, especially for indoor shots. Make sure your budget includes a spare SD card and a spare battery.

I don't recommend Sony on the basis that they're sticking with the proprietary Memory Stick Pro. Virtually all other cameras use SD cards.

Dick Smith are doing up to 25% off a lot of their digital cameras at the moment, though from the quick look I had it seems the big discounts are on crappy cameras. Worth checking out.

Been looking at the Lumix DMC-FT1.

Any reason why I shouldn't buy this camera?

Looks like a good camera to me - in that price bracket you could find a compact camera with more features, better lens etc, but if size is important, this camera would be adequate in those areas, particularly if you're primarily just going to be shooting in Auto mode. The shockproof/waterproof body looks good for travel, and recording HD video is pretty sweet. Make sure you get a big memory card if you intend on using the video function.

Is expert infotech a reputable site?

No run far away. Unless you don't care about warranty claims or receiving second hand goods sold as new.

Also a lot of their stuff is undisclosed parallel imports so they come with non nz plugs and adapters and no nz manufacturers support.

Expert Infotech have the FT1 at $120 cheaper than elsewhere. It is Parallel Imported. I can pick the product up from their store in Auckland(so can check for second hand goods, plugs etc).
They also state a 1 year warranty.

Thoughts?

My thought is that if it's that much cheaper than even your mate ar Harvey can get it, that's something to be concerned about. If you feel confident enough buying from their store, do so, but it's a big risk IMO. Keep in mind that they have a terribad reputation for accepting warranty claims, and because it's PI you won't get any support from the local distributors/manufacturers.

David read these
http://www.onlineshopreview.co.nz/reviews/expert-infotech-ltd/
http://www.gpforums.co.nz/showthread.php?s=&threadid=197997&perpage=35&pagenumber=1
http://pricespy.co.nz/forum/index.php?s=a03a4376b6479bcaac47d8c58dfe0a34&showtopic=86
http://pricespy.co.nz/store.php?ftgid=8234

Avoid this company. The camera is way cheaper than the competition for a reason - even a parallel import wouldn't pull the price down that far. It's either second hand (and likely a faulty return) or they are going to try a bait & switch.

I think my decision has been made then. So glad I didn't buy through these guys? Was so close.