You can get decent quality out of a mid-price camera. This is good for starters who have a desire for features but perhaps not very much experience.
I use an Olympus C-765 UZ (4.0 Megapixel), which features the all-important MACRO MODE for shooting close-up. This particular camera also records movies with sound and has an LCD screen for viewing scenes live and viewing shots and movies. It's a few years old now, but a worthy option. Prices vary from as little as 129 to around 287 USD. Camera media is called XD, and you can get a gig of memory pretty cheap. I recommend you buy a second battery, so one is recharging while the other is in use. Avoid third party brands, since they aren't as reliable and die out faster.
I also use an Olympus Evolt E-500 (8.0 Megapixel), which is more of a traditional photographer's camera, though digital, with nicer quality results and a formal lens system. This model allows you to view your photos on an LCD, but does not use the LCD for live shooting. For shooting you need to use the viewfinder. If you intend to buy a camera of this caliber, you will need to also purchase a macro lens. The camera can cost approximately 400 to 500 USD, though newer models of this line are available at 10 megapixels. Macro Lens is approximately 200 USD, though a higher quality model exists for double that. I actually do not own a macro lens for this camera yet, but I really want one for a big lego project. Always consider adding a UV lens to protect the main lens of the camera. Uses XD and two other types of memory.
Additionally, a tripod would be useful...
I believe my model is a Sunpak, which cost me about 49 USD. It sports a smooth feeling 3 way pan and tilt with a quick release system (this means there's a pad that you screw into the bottom of the camera, which can then be quickly attached or detached from the tripod frame itself. It's built out of aluminum, with a crank lever in the center shaft to raise or lower your camera position, can raise the camera to about... seven or eight feet max, but you can shorten the legs to make it about 2 feet tall. Also comes with built in retractable spikes if you need to set up outdoors on uneven terrain. Came with an extra mounting pad and a carrying case. Great all around tripod at a great value. Ordered mine from B&H Photo.
NEVER buy tripods at the mall, and be cautious of other brick and mortar retailers. They'll sell tiny tripods for more than what I paid for my more than capable Sunpak tripod.