For the 'Grandaddy" of digital zoom cameras, the Sony Mavica FD-91 has the best with an optical zoom of 14X. While they are not sold by Sony any longer, you can find them on eBay in the $500-$600 dollar range.

In my opinon, digial zoom is pretty useless. I post freighter photos to the news page at boatnerd.com on an almost daily basis and any photos that were taken with the digital zoom appear pixalized when brought up to full size. Optical zoom is the way to go if you can.

-Todd