[quote=TheBigM]
Indeed with the camera you have chosen you may indeed get much noisier pictures in low light since each pixel will have a lower surfae area without compensation in terms of optics, the sensor or image processing. [quote]
I'd like to echo this sentiment. I sell digital cameras for a living and this particular camera is extremely bad in low light levels, it shows distinct sensor "noise" in the form os red and green blotching in areas of black in low-light conditions.
I've learnt there is not much point in going much higher than 5mp in a "compact" camera, simply due to the physical size of the sensor (we're talking like the physical size of the "negative" here, not megapixels), it creates this noise simply because the pixels are packed closer together, indeed your Vivitar 3 meg is a pretty good beast considering the name, but then they're all made by Premier Imaging in Taiwan!
If you want higher quality, look at the Fuji or Panasonic "bridge" camera, so called as they "bridge" the gap between compacts and SLRs. Bridge cameras have physically larger sensors reducing the crosstalk that is sensor noise. These are good up to 6mp and have the added advantage of being up to 10x optical zoom.
Jessops have the Nikon D50 for less than £400 now too, this has a larger sensor again. But I am aware you are on a budget so take a look at this:
http://www.ebuyer.com/UK/product/112118
It's Vivitar again I know, but it originates from Premiere Imaging and all though it goes against my 5mp limit, it is pretty good image quality and doesn't suffer too badly from noise. The body is metal, it's lithium battery powered and is 3x optical.
Not bad for the money.