The only advice I could give her (which may be out-dated) is to only buy cameras from companies that made good film cameras; Nikon, Cannon, etc.
Is this advice good?
Not really. The SLR and digicam departments are separate, and even when they do communicate, what is good for a film/slr camera is not neccessarily good for a compact.
For instance, the Fuji Finepix F60 was one of the best compact cameras around, despite fuji not having much presence in the 35mm world (they did have a presence in 645 medium formats, though).
The interface, size, and screen on the sony cybershot T200 she tried are all really nice, but the pictures seem to have a fair amount of compression, which I wasn't able to turn off in the 5 minutes I played with it, and I didn't find a way to adjust it online, either. 8 megapixels seems kind of pointless if the pictures are compressed to hell anyways, but I don't really know much about cameras, so this could be par for the course for all I know.
Actually, the resolution and size of the sensor directly impacts how much noise will be in the picture, even if saved in uncompressed format.
The problem is that in the 'spec war' between manufacturers, companies are pushing higher density sensors at the expense of noise and image fidelity. The aforementioned F60 bucked this trend, using a large, low resolution sensor, and too great pictures as a result, but unfortunately, succcumbed in the end to market forces, and the replacement F80 is just as bad as any other compact out there.
So, any suggestions?
Here's a useful rule of thumb for compact digicams: they all suck.
I'm not being facetious, none of them will be anywhere near as good as a DSLR, and they all have atrocious low light performance (due again to the small sensors).
Once you realise that they all suck, it's time to weed out the ones that suck less, or at least whose relative strengths complement what you're after.
If you're after landscape/architecture/street photography, the Ricoh GX100 (I own one) is a good SLR/rangefinder substitute, as long as you realise it'll never be as sharp as a DSLR.
If you're after portrait photography, see if you can find a second hand F60 on ebay or something. 3 years on, the quality of the sensor is still unmatched in the market.
If you want superzooms (10x+), forget it. This is where the suckage exceeds the escape velocity of light, and you will simply be paying $$$ for a bulky, unwieldy mess that puts out abstract shots that makes Monet look like HDTV.
If you want sports/underwater photography, Olympus makes a range of ruggedised waterproof cameras. Do not underestimate their usefulness, especially if you ever go on a holiday to a beach/snorkelling resort.
At th end of the day, it is important to remember that a compact is a lifestyle choice, not a photographic tool. Commodity cameras from most of the big guys (Sony, Nikon, Panasonic, Olympus, Minolta, etc) will all be of roughly equivalent quality. Some have certain quirks (like Panasonic's love for excessive blur filter), but there is no real standout in terms of quality.
Wind, Sand and Stars.