Originally Posted by T.Dot_E30
This is not entirely true, atleast not for canon lenses.
That is only true when you use an EF (Full Frame) lens on a EF-S (Crop Sensor) camera.
For example an EF 50mm 1.8f, is effectively an 80mm on most crop sensor cameras (Xti, XSi, X1i, 40D, 50D, 7D, etc).
But a 18-55mm EF-S lens, is a 18-55mm lens on an EF-S camera.
I'm pretty sure this is the same for Nikons, they just use different codes (FX vs. DX) for their full frame lenes vs. crop.
Either way i think we are confusing the OP, i think all he needs is a LX3 and call it a day.
18-55 on a crop body is still multiplied by crop factor, regardless if it's EF-S or not. I wasn't sure, so I took one picture with my 18-55mm f/3.5-5.6 IS kit lens at 50mm FL (EF-S mount on my 450D/Rebel XSi), and one with my 50mm f/1.8 II (EF mount) and the photos have identical magnification.
Either way, for $500 he will barely get into Nikon/Canon DSLR (maybe used), or he can get a P&S and use it for now. Ideal setup would be a full frame DSLR with a 10-22 or 10-20 on it, but the lense alone is 3 times his budget, and full frames aren't pocket change either.