Nah the distortion is because of the cheap ass optics in the point and shoot camera's these days. My Cannon 3IS does the same thing. Its just because they try to cram soooo much zoom in a little package that the results is you get good/bad/bad/WORSE distortion based on how much zoom you are using. Its an easy fix in CS3. Its under Filter->Distort->lens correction. Play w/ the various setting and volia most of the barrel distortions/pincushioning/vignetting/chroma "aberrations" goes bye bye
