I use a Canon Powershot A95, and it is a great camera.
I think it would be more than acceptable as a camera for family pics. Why?
5 megapixels, autofocus, compactflash and a USB cable to transfer pics, pretty user-friendly software for managing pics, all kinds of different modes...including Pets, Snow, Foliage, etc.
The drawbacks are the zoom (only 3x...don't expect to be far away and zoom in for shots), the battery life (he *will* need to get rechargeable batteries, 4 AA and a charger..about $35 if he shops around), the standard storage (32 MB isn't much if he's taking ~2MB/pics on the highest settings...again, if he shops around, he can buy a 512MB card for another $35 or so), and the digital zoom creates quite a bit of noise.
Yeah, it sounds bad with those drawbacks, but the moment he does a macro shot of a flower (see my avatar for an example, or my photo gallery) or takes some spontaneous shots of his family, he'll be pretty amazed.
Just my two cents.
PS: go to your fave search engine and type in: consumer digital camera review, and you should find some good sites to guide you.
"Shopping around" is best done at Froogle.