When I was working in a camera store selling mostly film cameras it seemed to me most people wanted a small camera, big zoom, and big, easy to see viewfinder. That pretty much describes digital P&S; I'm sure all my old customers are loving the live action LCD on the back.
The digital camera that I dream of is like an Olympus Stylus Epic (the little no-zoom, film Stylus), but it has a sensor like what's in a 20D. And it needs aperture priority, and a pc socket so I can use off camera flash. But other than that, it can be just like a little P&S.