My wife and I recently upgraded from our Sony DSC-P8 to a Sony DSC-W130. So far we are extremely happy. We shopped around quite a bit before settling on the New cybershot, and spent a good deal of time trying out other brands. In the end, the smile shutter brought us back to Sony. It sounds like there is no way it would work, but it really does. We have two young children that are remarkably hard to catch smiling. With the New Sony, all we have to do is turn on the smile shutter and the camera does the rest. So far, we haven't missed a smile with the 3 year (with teeth) and have caught a few of the 4 month old (no teeth). It makes a difference.
The other feature that has been great so far is the burst mode. With my old camera, the missing time between shot resulted in a lot of blurring. The New camera manages to focus each shot much better. We played around with some moving targets, and the pictures came out great. One major drawback of burst mode, however, is that you can't use flash. I took a bunch of pictures indoors and the quality was ok, but not great. The flash just turns off when you switch to burst mode.
The video recording is great on this camera. Obviously not camcorder quality or anything, but very good for what you'd expect from a point and shoot. The sound quality still isn't that great, but much much better from my older camera. It seems like it balances the audio in the first few seconds. If the first few seconds are loud, the whole video will be softer. If you start out soft, however, you bury the needle when it gets lounder leading to some distortion. You also can't zoom while in video mode - something they don't tell you.
The flash recharges after about 1-2 seconds, which is great. It also is pretty effective for long distances.
I like the menu configurations, especially now that I've had some time to play with them.
picture quality is great, but I'm upgrading from a 2MP camera, so it probably wouldn't take too much to wow me. We took a ton of shots and were impressed at the level of detail when we zoomed in on our computer.
Overall, we are very happy with this camera. It has some limitations and problems, but for the money (and for being a point and shoot) it is great.