Canon Powershot A570 IS

The A570IS is a slightly larger camera that uses AAs, and has a very low price ($165 at amazon). It's bigger than the Powershot 850IS, at 3.52 x 2.53 x 1.69 in (most notably 0.7in thicker).

The specs:

CIPA: 400 shots using 2 AA NiMH batteries (900 with LCD off).

4x zoom lens, noticeable barrel distortion at wide angle, but only very minimal corner blurring.

2.5" LCD, 115k pixels, and a optical viewfinder as well.

The light sensitively looks pretty good, with relatively low-noise images up to iso 400, and very little noise reduction applied, which means that decent detail is seen even at iso 400.

Optical image stabilization, which DP review says works quite well.

Conclusion:

Not compact enough for me, but if that's not so important to you this sounds like an excellent bargain.

Positive review at dp review, with lots of good spec oriented tests.