Clay's right; don't discount Nikon Digitals
I'm not a professional or even really good photographer, my pictures will attest to that, but I have taken thousands of digital pictures in at least three different cameras. I first had a Kodak DC280 and now own both a Nikon Coolpix 995 and Sony DSC-U20. I won't go into the Sony, because it is not a good camera for someone who owns only one; it's very small and convenient to carry; takes semi-decent pics, but has very few features.
The Nikon on the other hand has more features than I can use, can take some of the best pictures you can find, including sub 1" macros, and has one of the coolest forms I've ever seen in a camera.
As a previous poster mentioned, Nikon optics are world renowned for their quality, and that even shows in their digital cameras. As Rich mentioned, light is always an issue, even more so with digital cams, due to thier digital sensors, but you can put a flash bracket on these Nikons as well as many other digital cameras.
As for your disks, you're much better off with something non-permanent like Compact Flash (most common), SD, XD, or other reusable card. You'll want to take so many pictures and so many of them won't be 'keepers' that you'll waste lots of space on each CD. Plus, you have to carry around that CD(s), which while not cumbersome, you could use the space better for some sort of filters, extra battery, or mini-tripod, etc.
Here's a few pics I've taken over the past couple years with my Nikon. There have been one or two newer versions of the split-body Coolpix's like mine released since it came out, and you should be able to find one less than $500 on Ebay or other store.
Just a few of the pictures I have taken. I think my favorite is the one of Mt. Fuji. It is unedited; just like I downloaded it from the camera.
DP Review is an excellent source of information on cameras with reviews, comparison photos and forums where you can get recommendations from people just like us as well as professional photographers. Good luck.