I have to agree with the existing lenses not being all that useful on a digital body. Crop factor sucks, and getting a full-frame body where your lenses work the same as on film is gonna cost you ten times what you're looking to spend.
You can get a Panasonic GX1 body for like $240 brand new from a reputable dealer these days, and a 14-42 (28-84 equivalent, micro four thirds has a 2x crop factor) kit lens to go with it for less than $100. That's actually exactly what I have as a "casual" camera system for when I need a camera I can throw in a regular bag with the rest of my junk and not lug around my work DSLR setup. It also does pretty nice video, something Panasonic is well-known for. The other nice thing about the whole Micro Four Thirds system is that there's a good lens selection, and they introduce new models so fast that old ones get really cheap, that $200 GX1 was like $800 a year ago. That means that you can grab a new last-gen model every couple years and get a big jump in quality every time while still spending a pretty miniscule amount of money by camera standards.
