Instead of making your next printer yet another HP, the 75 million iPod touch, iPhone, and iPad owners should consider an Epson printer (see supported models below) and Epson's free "Epson iPrint" application for printing photos directly from your device.
Many of you know that I'm a fan of Epson printers such as the Artisan 810 (print/copy/scan/fax w/wireless networking), and that I own (and love) last year's model, the Artisan 800. The Artisan paper tray has 2 levels built-in; you can have 8.5x11" plain paper AND photo paper (3.5x5, 4x6, or 5x7) loaded at the same time. Plus you won't have all the cumbersome buttons; the Artisan printers have a large touchpad with 'soft keys' as well as photo preview. Artisan 810 lists for $299, but shop around, you can find them on sale for $199. If you really want a 2nd paper tray (for envelopes and other things, they're available for $25 including shipping).
Supported Epson printers with Ethernet or Wi-Fi connections (USB not supported for Epson iPrint):
* Artisan® 700, 710, 800, 810
* Epson Stylus® NX420, NX510, NX515
* WorkForce® 310, 520, 600, 610, 615