If you're somewhat more serious about photography, you really want the extra controls on the larger cameras. I've got a Canon G1, with the external Canon 420EX flash. It's hardly a pocket camera, but you've got all kinds of flexibility. Also, you can fit it with an IBM 1GB Microdrive, which allows for some 400-odd uncompressed images, or thousands of JPEG images.

The new Canon G2 appears to have fixed an number of things that annoy me about the G1. If I didn't already own a G1, I'd be ordering a G2 right away.

What's it mean to be "serious"? If you've ever spent serious time with a manual camera and like the notion of tweaking your depth of field, doing long exposures with a flash, or if you just want access to the raw bits and don't want the camera JPEG'ing your images for you, then you want the bigger camera. Also, the nifty flip-out screen of the G1 lets you shoot from the hip, shoot from overhead, etc. It's all amazingly versatile.