Jay, the M407 is much more camera for just a little bit more MONEY... the extra megapixel goes a LONG way to a clearer photo once you crop, enhance and enlarge the one piece you want, they're pretty much the same camera otherwise, but believe me... it's like the difference between 1024x768 and 1280x1024 on your display settings, the numbers don't look that different but once you change over you really see it.
What you should be more interested in is the macro setting on the HP's for nice model shots... try no zoom, plenty of light and use the macro setting to get the camera itself in close... it will give you much more detail, no fuzziness or distortion... so when you manipulate it to crop and resize it, the END image is closer to the original...
Good luck! It looked like a good overall camera, the 3MP one would work, but like I mentioned, for $30 US more you get the extra megapixel which is a huge difference...
oh yeah if you plan on using this on vacation or snap shot stuff like brithday parties, I recommend getting more memory... at least a 128MB SD/MMC which should run you about $35 to $55 more... it's not mandatory right away but 16MB will only hold a few pics at full resolution.. (probably about 12 or so) the 128 stick at 4MP will give you around 60 to 70 pics without deleting or downloading any... and the generic ones are just as good and cheaper so don't worry about it being HP branded.
---edit---
I just reread this and have NO idea why I capitalized money up there... maybe it is my wife's uncontrolled spending recently... ::shrug::