One area to really focus on is the lens zoom range or macro capability. I can't live without a 28mm but don't need much tele range. Others may be different; maybe a macro is desired or a single focal length around 35mm (35mm film equiv) is sufficient. -Point is that you should go first for a camera that can capture the view as you see it.
FYI: I was a photojournalist for about two lifetimes...25yrs+.

I've shot everything from Minox to 8"x10" and you can apply the same rules to photographic equipment that you do to any of your hiking gear: keep it simple--- take the minimum needed to accomlish the goal. Not a bad philosphy for life in general, IMHO.

If you are going to go hiking and want to make images for sale you have a different goal than someone who wants a record or memory of the event. If you want to make 16"x20" prints, you have a different goal than someone who wants to illustrate a Web page or a book. Fine art image making might find you with an 8x10 view camera or a Diana plastic camera or anything in between-- there you are picking the equipment to give the vision you want to present. So take what you need for your purposes and keep your head.

No need for guilt with any of them. I personally find it better for my head and my images if I keep things simple. A day spent with a 35mm slr and a short zoom or a fixed focal length lens is usually more productive than hauling a bag full of lenses and spending too much time fiddling with gear. BTW, I share Ron's preference in a 35mm focal length lens on a 35mm camera. If I am trying to cover an event, three lenses are plenty.

I haven't shot much film in the last few years as most of my stuff is for a Web page or just personal records. Digital cameras are doing the job nicely for me. I just got a Canon SD200 Digital Elph and it will take care of my hiking needs nicely-- small, light, inexpensive, easy to use-- all the atributes that George Eastman tried to build into his Kodak camera 118 years ago (his technological leap was roll film).

Check out the SD200 review at http://www.dpreview.com/news/0409/04092102canon_sd200sd300.asp . Mine weighs 4.8oz/135g with battery, memory card, and a bit of reflective cord for a wrist strap. I have a little Z20 LowePro case that I picked up in a thrift store for 99 cents that has more than enough room for the camera and one of the REI UltraPod tripods can fit in the outer pocket. I added a Black Diamond Micron plastic wire gate carabiner to the belt loop rather than use a strap. The whole kit is 8.5 ounces. I could get a couple ounces off by using an Aloksak for a case.

The only thing I don't like about the mini digital cameras are the batteries. There isn't much choice though-- it you want to get a light camera you have to put up with proprietary rechargable batteries. I ordered a couple spares on Ebay and they are only 0.5oz each. Most of my trips are 2-3 days, so it isn't a big problem for me. Three fully charged batteries would take me a long, long way.

If you are looking for a light 35mm camera, I like the Olympus Stylus a lot.

I like my Canon Digital Elf SD300 which I believe has been replaced by the SD400.
SD300 specs
It weighs 5.4oz
Fits in your palm
4 Megapixels
3x optical zoom
3.6x Digital Zoom
11x combined zoom
Uses SD Flash
2" LCD screen
3 Minutes of video can be recorded at a time with sound

The SD400 looks like it is pretty much the same camera except it has 5Megapixel and 12x Zoom

Amazingly they all seem to be available still, so you can fit your budget and resolution needs. I got mine used by trading a collection of old photo odds and ends I had cleaned up.

I wonder how they compare on battery consumption. Getting good information on that is like getting accurate weights on hiking gear :)

Zoom ranges are another rant of mine. Sports drives a lot of the market and both video and still cameras come with really long lenses, but there are very few wide angle cameras. I like to take landscapes and I work for an architectural firm so I've had cause to want wider coverage cameras for both. Something like a 28-100mm 35mm equivalent would be nice. Olympus just discontinued a 7MP camera in that range (too big and heavy for hiking-- might as well have an SLR). 24-100mm would be to die for, but that is a very difficult and expensive zoom to make. For the record, the SD200 has a 3:1 zoom with a 35-105mm 35mm equivalent.

Sony has some really thin rigs with large LCD's in the 5MP range too.

The SD400 is a very nice little camera. I bought one for my wife and swipe it pretty frequently. It still sports a 3x optical zoom and has the all-important optical viewfinder, increasingly rare in this size range. I'd like to see RAW mode added, because the optics deserve it.

My biggest problem is getting accurate macro focus, as the view screen isn't sharp enough to verify focus.

It's not a tiny camera by any stretch of the imagination, but the Kodak P880 has a terrific 24-140 equivalent zoom. I'd like to see more makers follow suit.

The P880 looks like a great camera, and it has a lot of features for the weight (17.6oz/500g). Not exactly ultralight stuff, but I'll be happy to field test one :)