all depends how keen you're on photography!
Nothing quality wise can beat DSLR but then you end up with a kit weighing 10 kg to carry around. Also for some peeps there is no difference between shots taken by 100 quid compact and 3k DSLR. All depends if you have this gift and you're really into it.
I just bought a camera two weeks ago and ended up with advanced compact which for 99% of people will make the same quality pics as more expensive kit. I wanted something just for shooting, light to carry around, taking great pics, big zoom (mine has 20 x optical zoom) and shoot full HD movies. I am not disregarding the fact that more expensive kit will take better pictures. What I am saying here is that I am pretty sure I won;t be able to see the difference.
Read hundreds of reviews and ended with Sony Cybershot DSC-HX20V which replaced my 6 year Canon powershot. Really impressed how technology moved forward. This little compact can take 10 pics per sec and track any object quickly for sports pics. It wasn't possible with my old camera back in the days. Also optical zoom is impressive with 20 x and HD movie mode.
It costed 260 quid so you would be left with 140 for the car mods!
Try those two sites and have a read about tests and comparisons.
http://www.dpreview.com/http://www.imaging-resource.com/Whatever you choose there are great cameras out there!
Paul