My friend is buying a digital point-and-shoot camera, which he wants to use to click family pictures including a lot of pictures of their newborn son.
What camera qualities should he be looking for while buying?
Family pictures aren't really a subject that requires a special camera model or feature. Newborn photography can be quite challenging on the other hand. Features that will be important to this type of photography would be all of the features that you would buy a DSLR for - large apertures, off camera flash, fast continuous shooting, low noise high ISO performance, and near instant shutter lag.
You aren't going to find all of these things in a point-and-shoot camera, but you can find things like a f/2.0 lens, better high ISO performance, and a hot shoe. Another thing you could look for is getting a fixed lens point-and-shoot that doesn't extend the lens each time, and that will speed up the time till the first shot. But most of these are either the very basic entry level models with much smaller apertures, or the bigger PEN sized cameras.
Newborns don't move that much, but large apertures and bokeh is nice for this type of photography. When they are awake, they flail their hands and feet around so much, that it can be difficult to get a sharp image indoors without additional lighting. Not to mention in only a few months they will start moving QUICK! That is when the high ISO performance will really come in handy.
This list may SEEM obvious. A camera that:
Quite a lot more could be added, but I'll see how that's received. I may add more if it seems useful so far.
Any recent camera from an actual camera manufacturer (a company that also makes interchangeable lens cameras) will be ok.
You should ignore mega pixels (any modern camera is going to have enough megapixels) and digital zoom (that usually is just cropping) those doesn't mean anything.
Everything else is a tradeoff - for example 10x zoom is great but that zoom lens is going to be big and the camera isn't going to fit in your pocket.
If you can test the camera before buying take some pictures indoors under your normal lighting and make sure the picture is good with no excessive noise, check that the focus is fast enough and the shutter lag (time between pressing the shatter and taking the picture).
It's basically the same advice I gave on the DSLR recommendation question - get a camera that is good enough and spend your time taking pictures not reviewing cameras.