Re: Had a debate with my friend just now...
Might I be so bold as to suggest either a Canon Powershot A620, or an Olympus C-7000
These are excellent 7 Megapixel cameras, that will cost them under $400, they will take great pictures in automatic exposure mode, and they will provide enough manual control options to grow with, as they learn something real about photography.
They are also about 1/3 the size of a DSLR with basic lens, and weigh 1/3 as much.
In my experience, they can handle about 75% of the situations that a DSLR can handle, but, because of their small size and weight, they will be carried around at least twice as often. Of course, your friend, almost certainly, does not want to hear any of this. So let them do what they want, and don't get into a fight with them over it.
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