Canon S3 IS or S5 IS?

Depends on what you want. I recently got the S5 and am VERY happy with it. But from all I've read, the S3 is basically the same - the upgrades weren't major. Still, the last camera I bought was determined more by price than features (I wanted a cheapy "I won't be heartbroken if it's stolen when I'm mugged" camera), and I was very disappointed with it. I really regretted not getting a slightly better one for a bit more $. 

Here's an example of what mine does at max zoom (the image stabilization is wonderful):

If I were in your shoes, I would be thinking - what's the expected life span of this camera? Would you replace it in 2 years? 5? How much is it worth to you for it to last that little extra bit longer before it feels obsolete?

I think they're both great cameras, and hopefully either way you'll be really happy :) 

Edit: it's a little blurry from compression, I think - in raw form it's quite sharp. 

From what I read when I was trying to pick a camera, there's not much difference feature wise between the S3 and the S5 so if the price is a huge difference I'd go with the S3.

S3 vs S5...good question!  They have different processors (DIGIC II vs DIGIC III).  Many actually prefer the Digic II.  Sometimes the fancy "noise reduction" of the newer model cameras does weird things to images.  That is a big criticism of the Panasonic I just bought, however I don't really shoot in low-light conditions or use higher ISOs so it doesn't really effect me.

http://forums.dpreview.com/forums/read.asp?forum=1010&message=23488260 

http://www.dgrin.com/showthread.php?t=63923 

Having only done about 5 minutes of research, my knee-jerk reaction is to go with the S3, agreeing with this person, "Usually squeezing more pixels into the same size sensor, the same sensor which already has too many pixels on it, will result in more speckling, as mentioned before. Not to mention the S5 has a much slower shooting rate than the S3. And face detection... you can't see the faces on the LCD and focus and expose accordingly?"

I've got the S3 and I like it.  I personally wouldn't ever upgrade to the S5 as there just isn't a significant difference, but then I didn't make the choice between the two in the beginning. 

The biggest complaint that I have with my current camera is that it sucks at taking pics in low light or mixed light conditions - which is how I shoot most of the time - either hiking or camping and such.

I'm torn between the 2 but I may go with the S3.....we'll see. I'm still kind of irritated about my S2 dieing right after the warranty expired. I don't want a repeat of that with this new one.