My wife is taking my XSi and 18-55mm IS camera for a trip, what is the best camera bag for that. she wants it as small as possible as well

For small shoulder bags that are well made and don't cost an arm and leg, check out the Domke line. There are many so you will have measure your stuff and see what works.

For a shoulder lens mounted kit, Kenesis makes some good ones...they are "holsters" but come with a shoulder strap.

LowePro has a great line too but heavy on the padding.

Domke may be the ticket.

Do you want this bag to be strictly a camera bag only or do you want to be able to carry other stuff with it while traveling? (water bottle, documents, maps, tissues, etc)

Tissues? I'm almost afraid to ask what kind.

EBH

Check out the Crumpler 4mdh bag.

http://www.bhphotovideo.com/bnh/controller/home?O=NavBar&A=getItemDetail&Q=&sku=606443&is=REG&si=rev#anchorToReadReviews

Wife? Crumpler! They're great bags and look far better on a woman than any Domke

So +1 on the 4MDH, maybe in a nice color.