All right, so I picked my buddy's brain just a little bit ago. He said there were two cameras off hand that he knew were a bit better and somewhat in that price range. The two would be the Panasonic GH2 (more expensive) and the Sony NEX 5N.
Now, assuming your dad is more comfortable with Sony, the
NEX 5N is the way to go, as it is really good with photo and video. In fact, he says the video is so good, that he could use it as a B camera when he isn't using his
Panasonic AF100 (which is a stellar video camcorder). Since your dad has been out of the loop for a while, he may find this interesting as well. If he likes to take manual shots, he can buy
this adapter and even use old school lenses on it. That way, he can mix a little of the old school with the new! Here is just a sample of some of the
lenses he could throw on there. According to my buddy, all of the images still look primo. Plus, the NEX 5N has a bigger sensor; so he may be more interested in that if he is primarily taking stills.
The only upgrade he recommended from that would be the
Panasonic GH2 (it's a lot more expensive, though). Main reason why he pointed that one out is because it may have more options, as it's been out a bit longer. Nonetheless, Sony will catch up. Again, there are a lot of modifications with adapters that he can do with this camera as well. However, the NEX 5N is probably still the way to go, in terms of price/value.
As for taking the T3 route, he said to go with the "
T3i". It's the upgraded version and apparently handles the video better. It's a bit more expensive, though.
One last thing to consider is that the NEX 5N has a lot of touch screen stuff as an alternative way to toggle the camera controls, whereas the T3i will have more buttons. So the NEX 5N may be a bit confusing for an older fellow, but once mastered, he will achieve some great stuff.
Hope that helps! Let me know what he ends up getting or if he needs anymore help. I can always get a hold of my friend, if need be.