In my humble opinion, what you are looking for is a "prosumer" camera - i.e. a camera that is a good balance of pro-level features/image quality of a DSLR and the compactness and "auto" mode of a consumer camera.
Your budget is also just perfect for this category - higher than a consumer camera and lower than a pro-level DSLR.
You might want to look at a proper prosumer camera - The
Canon G11 is probably the best in this class. It is very solidly built, has loads of manual features that you can use when you want to get creative, and has a nice bright lens and large sensor. Unless you are looking at extreme scenarios, this camera should give you very good pictures.
You might also like this camera if you like the chunky retro look.
Downside - it is bulky and will be larger than a P&S, but definitely not as bulky as a DSLR. I don't think it will be pocketable unless you are wearing a jacket, but you can probably clip it to your belt.
The Canon S90 is basically a compact version of the G11.