Handbag cam... recommendations?

Hello fellow blippers! I'm thinking of getting a handbag size camera, so I'm looking for recommendations on compact cameras, has anyone got any ideas?

As you can see I have a splendid collection of pristine looking handbags, because to take my D50 and lenses requires that I use the kata rucksack at the back...

so I'd like something small, portable, still with manual functions that I can use on those occasions when a rucksack of kit just isn't convenient.

Don't have a huge amount of dosh... but just got some extra work... see yesterdays blip, so wanting to spend on camera stuff... advice will be gratefully received : )