Actually, my terminology was a bit off-correct term is 'softbox':
http://www.calumetphoto.com/item/RM3122/ Shakran's and my suggestions for using lamps draped with cloth or dryer sheets replaces the softbox effect-somewhat.
As for a camera, everyone has different tastes and desires. Best thing to do is go to review sites such as Steve's Reviews or PopPhoto where cameras are tested, not just peer-reviewed. Once you've done that, I'd suggest going to a local store and actually looking at the camera, feeling it, checking out its ease of use.
Keep in mind that the megapixel ratings are only a minimal guide-a 6.1mp DSLR of high quality will outperform a 10mp point'n'shoot, but, as I stated before, using any camera as a hard-drive(working directly off it and not uploading first to the computer) will increase your options for optimal saving of files; even a default jpeg of 72dpi in a camera can be saved as a tiff 300dpi through Photoshop or ImageReady, etc.(300dpi is print-quality. For website usage, 72dpi is standard)
There are a myriad of sites and forums that will give guidance and suggestions about setups and camera mode usage. Read, read, read!