The Canon Powershot SD700 is my new "lust after" camera. I have an SD500 now, and it is an amazing camera. I can not recommend Canon digital cameras enough. I've had digital camera from Minolta, Kodak, and Nikon, and Canon is by far the best. The SD500 is light, has great image quality, and is fast in most aspects of a good camera experience (boot time, cycle time, zoom speed, rapid shot mode). The concept of getting 4X optical zoom and image stabilization is only icing on the cake.
I'm surprised that they had to shed 1MP to get the extra capabilities, but I think it is a worthwhile trade. The camera is supposed to be available in May, and I look forward to the review on DPreview.com