What is the difference between optical zoom and digital zoom ?

If you are new to digi-photo (as your question allows me to assume), this may be a better "layman's" definition. Optical zoom is the true enlargement of an image: this is what your non-digital camera has always done, and uses the same process as a microscope to make images seem larger. Digital zoom is the computer taking the optical pictures and translating it into a binary formula (pixels) that it then tries to compress. If you want to be able to zoom in on an image (i.e. long-range nature shots, close-ups of Johnny at the school concert), you need a higher optical zoom. Digital zoom can also increase the image enlargement, but because it is pixelated (converted to small individual squares), the picture will eventually become blurry and "blocky," as if constructed out of Legos. If you want a camera that will always take clear pictures, look for optical zoom and at least 6.0 megapixels (1000s of those small individual squares: 6.0 megapixels = 6000 little squares / frame). If you want to do more creative manipulation, I would recommend freeware to download (I personally like Picasa; see more info on this site).

Hope this helps; best of luck with your new camera!