The DIgital Rebel is the bag full of DSLR and lenses so scratch that, even though I'm a big bag o' Canon 'n' lenses guy now. Essentially, you have two choices: Bridge or Compact.
My personal advice would be the Lumix LX5 if you can afford $500 for a compact. However, you may prefer the Canon offering; the G11. That's your choice, but yeah, I prefer the Panasonic non-SLRs.
While this review is one model out of date, it does a good job summarising the high-end Compact market: http://www.dpreview.com/reviews/Q408enthusiastgroup/
Or, you could go for a Bridge, which isn't as small, but you usually get honking great zooms on them. The Panasonics offer a 24x zoom, for instance.
Or, get a decent phone. The iPhone 4 replaced my need for a compact and I hear there are some good Android cameras out there.
ps. For watches, you don't want a Macro unless you're taking ridiculously close up shots. All of my regular watch shots are taken with normal lenses or non-macro cameras.