I've just switched from trusty old 35mm to digital and will never go back.
I spent a bit more on the camera than you want to, so I won't talk about that, but I can recommend this website for good, unbiased camera reviews.
http://www.dpreview.com/
As far as the printer is concerned, I looked at getting one, but found out the the photo quality paper was VERY expensive. Couple this with the purchase price of the printer, and the inevitable cartridge replacements, and I abaondoned the idea.
I then found out there are 2 services in Singapore where you can upload your digital pictures over the internet, have them printed and then mailed to you, all within 3 days. The price is 50 cents for a 4x6 photo, so works out cheaper than buying the special paper !
I have tried them both. They are the same price, and give exactly the same service (Which is very good)
http://www.fujifilm.com.sg
or
http://www.singnet.com.sg and select "Photo Sprint"
So, in summary, have a look at the first website. Don't buy the printer, and use the printer money to buy a better camera !