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What would be the best digital camera for you, that is, a balance between cost and performance? I'm planning to buy one but I'm confused with all the brands and models around.
Also, I've also read somewhere that megapixel ratings doesn't really have a great impact on image quality, i.e., a 3MP camera has the same image quality as a 6MP one. Is that true?

There is no such best camera or best product. One would say X is the best, the other would say Y is the best. The only two things to consider are how much you can afford (budget) and what are your requirements/how do you want to use of it?