No problem Aussie, it is on my wish list for x-mas
I am not sure if you can upgrade the camera, but, I imagine that with enough tinkering around you could. I would say the reason that they went with a 1.3 megapixel camera was to keep the price down. Most of the 3.0-6.4 megapixel cameras are over $400.00 by themselves.
I think that the picture quality will be fine though, the best quality pics this camera can take is 1280X1024 which is HUGE, bigger than 95% of the computer monitors out there. The mid pics are 1024X768 which is still very big, and the "small" pictures are 640X480, which is still bigger than most pics for posting on message boards.