Why not the Panasonic LS70 for just 6500 with a 1 GB SD card. It comes with Optical IS, has 7 MP and a fantastic 3 year warranty. The only downside of this cam is the smallish 2.0 TFT screen. But 2" is not too small IMHO.
My friend bought this cam and he is very happy with it.
No warrantry in India if u buy from US. Tho if handled carefully there shudnt b any issues. In case of problems later, u can always goto canon service centers, tho they ll charge u of course
n yes, thats pricin for a new one. why do u think everyone gets stuff from US
Something that you guys are missing out entirely here.
Type of battery
Since its used by your parents and I expect this to be used mostly in the house for social occasions or outdoors to shoot landscapes etc. The first part is most important.
I’d highly advise you to opt for a Lithium-ion based camera. The flash recycle for Li-ion based cam is light years ahead of a 2xAA-based camera. The last thing you want for your parents to do is to wait for flash to recycle after taking some 30-40 shots with flash on one night (typical amount for a birthday or a gathering of any type).
They’ll always be able to charge the Li-ion at home, and most cells run easily for 200+ shots (atleast). Its as easy as charging a cellphone.
Given that, and also that you need IS. I’d look at the Sony Cybershot range which are smaller and sleeker in size and dimensions to the Canon A-range or the IXUS range from Canon itself.
Hence:
**1. Sony Cybershot W80
2. Any Canon IXUS with IS at the same price (if available)
**
The way I look at it, the extra zoom (4x vs 3x) and manual controls of the A-series will never be used.
On a side-note, here are my 3 must-haves for any point-and-shoot camera for “the non-enthusiast” user:
IS
Big screen and yet, small-compact enough to fit in a purse/pocket/belt-clip
Li-ion for fast flash recycling
Optionally, but equally important:
4. Wide-angle at 28mm (some Canon IXUS, all Panasonic Lumix range)
Think about it.
Payne
^ Damn man. JJmehta is not listing the W80 anymore, though I heard it was around the 10k mark here in Mumbai around a month ago. Don’t remember where. My dad bought it for 8k in Singapore.
It’s worth it for you to go down to a Heera Panna or an Alfa and check out these cameras yourself.
My suggestions: The W80 or the W120. The W120 is listed on JJmehta for 12.8k. But it comes with a much better feature set: 32-128mm 4x zoom. It has everything that I mentioned a “general” cam would require. JJmehta usually quote a bit higher than other rates, so do some shopping man! Stop posting here.
570 will be fine for ur needs.
extra megapixels wont do much for you in a P&S 
+ optical viewfinder if ur in bright sunlight n cant use the LCD (no viewfinder on the pany)