If you are going to keep your images small, your resolution will be less important than if you intend to project or print large pictures. These are suitable for the camera buff who wants to go digital. When I refer to optics, I mean lens quality. As in any serious camera consideration, the better the lens, the better the picture. With a few exceptions, those cameras in each of the megapixel categories will compete with one another for perceptible lens quality.
Digital cameras are generally compact, but only a couple are pocket sized.
I have always found the small cameras to be attractive alternatives. But you will compromise on the ease of handling. For a digital camera, I find the Cannon Elf to be just too small. It is difficult to keep still if you are trying to use the little LCD screen on the back. Select a size that is comfortable in your hands.