Problem with close-up pic's of 50's set?

[Bertram]

I seem to be having problems photographing folks (family) over 50. I have a
Kodak DC215 (1M pixel with built-in flash) and at 3-8 ft it seems to
high-light the lines in my subjects faces and necks.

I usually have to touch-up the picture in an imaging program and I find that
these lines are made-up of 2 or 3 pixels.

Now what I am wondering is.... If I replace my camera with a 3,4,5 M pixel
camera... Would this help the problem with my close-ups.

If upgrading my camera is the answer, which (Nikon, Canon, Olympus...
probably) would you suggest.

Price range $300-350. If I can find a good discount on a more expensive
camera that puts it in my price range I will shop.

I usually take spontanious pictures of landscapes and friends, picture setup
time is just a few second or a couple of minutes at the most. My Kodak
(DC215) seems to do an all right job but the pictures don't have the depth
of a 35mm SLR picture and for older folks it is terrible!

-Thanks

[Bertram]