Kaplan
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Now, about cameras, what would you recommend if I stepped up from a pocket camera?
I take pictures indoors and outdoors but rarely do 'action' shots.
I'm pretty satisfied with my new Canon S90. It's still a pocket camera but it has full manual controls as well. As you don't do action shots and if you like the portability, it might be something for you. There are a several reviews of it on the net if you want to check it out.
But if better image quality is more important than portability to you, an entry level DSLR will get you that for the same price or slightly more.
Btw, one of the things that persuaded me to get the S90 was this thread @ DPreview. Obviously a DSLR would have performed better, but I think the results ares very impressive for such a small camera, especially considering the mixed lighting conditions.