Creative Juices!
I didn't need the ultimate camera, but I did want the option to take total control, being creative or coping with difficult shooting conditions.
The Canon PowerShot S3 IS is for great pictures that are well beyond those you can get with your pocket camera.
OK, look... so you can't jam this camera in your jeans pocket. Your pocket camera or the camera in your phone is great for that.
But on the other hand, it is not bulky and a pain to carry like some big SLRs.   
And it looks "pro" -- really cool.  I get lots of complements.
I had a Panasonic Lumix DNC-TZ-1. It was a little smaller but it allowed very little control or creativity.

Viewfinder
I was originally thinking of an optical viewfinder, but the electronic viewfinder has features and advantages that are worthy of your consideration.
The only disadvantage I can find is the electronic viewfinder is not quite bright enough in full sun.
Your results are shown in the viewfinder or screen so you can decide if you should take the shot again.
It makes manual shooting fun and easy even with difficult sun and shadow.
(A histogram display is also a great help.)

Swingin' Screen
The swing-out screen lets you take pictures in ways you could never imagine before.
Self-portraits and various arms-length perspectives are very easy.
In a crowd, you can hold your camera at arm's length over everyone's head.

High Speed Film?
High ISO pictures are noisy because the camera does not smear them out just to pretend that noise doesn't exist.  
Aftermarket software is available to help with noise. A special scene setting does a good job with point-and-shoot in low light.

What about the "IS" feature?
The image stabilization feature is "transparent" to you. It just takes a little better pictures than life without it. However, it will not replace your tripod.
So carry your tripod and take awesome architectural shots with the available light (for example) inside a great cathedral.

Movies
Press the movie button for no-brainer movies with stereo sound... Movie clips are better than you would expect.

Batts. & Cards
Uses 4 regular or NiMH AA batteries for flexibility and convenience. SD memory cards are readily available.
I use a card reader and have never connected the camera to a computer.
A cable connects the camera to your TV for instant viewing.

Little Things
Macro close ups work great, but a close up lens is handy if you want to use the zoom on objects a couple feet away.
Super macro gets objects almost touching the lens.

Panorama
Panorama shots are easy with exposure lock or manual mode. This makes ultra wide-angle possible.  Software is included.

Flash
If you're in a museum and the flash is closed, then the flash is off. Period. No surprises.
Flash intensity is adjustable.

Zoom Zoom
Need Superman eyes? Take a picture with 12x zoom, then review with the zoom feature. Awesome.
Speaking of zoom, the camera is rather quick... not a lot of waiting for focus or processing.

Modes
Plenty of zoom, shooting modes, bells and whistles to satisfy everyone. (A beginner mode is a great place to start.)

What's Not So Good?
The lens cap is the worst. Period. It pops off automatically when you power up, but it comes off too easily at other times, too.
No carrying case was included. You'll need some kind of case to store the camera when not in use.
I use a black nylon "waist bag" that works great!