Sony and panasonic had also been in the camera industry for decades too beside Canon, and Nikon. Well the Video camera industry that is. So, when it comes to digital cameras, both sony and panasonic had really good picture quality for their cameras.
Sure, in some cases, Canon and Nikon might beat their quality a bit. But dollar for dollar, they are very close in overall performance. That you can\'t go wrong with any of them. It comes down on what you are looking for specifically.
Of course, doesn\'t matter if it\'s a camcorder or it\'s a camera, optical zoom is the way to go for full resolution. digital zoom just zoom in the resolution of the picture.
Say if the picture has 5 megapixels, zooming in will reduce the number of pixels, but you get bigger area picture that you zoomed in. Zooming in too much will reduce the 5 megapixels to say like 1 megapixels. And you might notice some pixelation because of the digital zooming blow up the pixels more. With no good scaler, you get pixelation. So, like titan said, its better that it\'s done on the computer than on the camera where the software editing might have better scaling for cropping and blowing up images or shrinking images for that matter.