I had a point and shoot Fuji (ZLR) until a few weeks ago. I'd say if you feel like you've outgrown your camera, that's the telling factor. 4 MP won't enlarge to 12X12 flawlessly, though it will do well enough; so it's up to you! There are so many great P&S's out there today anyway. My dad just got a 12X zoom 10 MP Canon for $200.
A friend of mine who is an amateur photographer told me that we will always want better and better equipment---so I think there is envy at every level!
Sarah