I will second you on that choice.
1)Has an excelent rating for ISO sensitivity (50 -800) which means you be able to take great shots in mixed light conditions and increase flash range. Also ISO50 alows you to take excelent digital noise free shots.
2)3 MP is good enough for any 8by10.
3)Regular AA batteries are pretty easy to come by and with a set of NiMH you be pretty much allright.
4)Compact flash cards are growing bigger and bigger, you will be able to replace the supplied 16mb with bigger size at low cost
5)Lens is always great on nikons and their marco capability is outstanding
6)It only does JPEGs but that's all right.
7)It is small and durable.

Word of advice. Get yourself a small transparent piece of plastic (one that is used to protect screens on the PDAs) and apply it to the LCD monitor. You will have less regrets about wiping of the back with your sleeve <img src="images/graemlins/smile.gif" alt="" />.

Matt

ps.
The only thing out there that would be smaller but not really better in quality is Pentax Optio S.