I've had a couple of CD-based Sony's in the past, the CD300 and CD400 (3 and 4MP respectively). Good cameras, sharp lens and easy to use. The CD500 is about to hit the market soon. The only down-side of the CD series is that they produce higher noise compared to the flash memory ones, but for me that was only a problem when shooting in hot weather (heat produces more noise too). I've had the Canon G2 for a while and now I've moved on to the G3 which is very nice with loads of features, 4x zoom, hot-shoe for external flash, ND filter (better control of DOF in bright weather), intervalometer (taking a set number of shots at set intervals automatically), RAW capability and software to control the camera from the computer (although it does need some more work in my opinion!).
The digital zoom will take the total to 14x but as has been mentioned this is not very useful, unless you have no choice in which case use as less zoom as possible. The only difference with using the camera's zoom compared to PS or other software package, is that the zooming on the camera occurs before the JPEG compression, so you don't zoom the artefacts as well. On the other hand, if you shoot RAW, it would probably be better to use PS to do bicubic resizing, although I haven't done or seen any testing of that sort so I don't know if it's worth the trouble.
The one negative thing about the G3 is probably the focusing which is a bit slower than other cameras, especially in low light... but there are ways to get 'round it!
So, I can recommend the G3 as being a very good camera with loads of features and certain shortcomings. But then there is no such thing as a perfect camera. Maybe check out the Sony DSC-V1 as well. Looks promising, but haven't seen any reviews yet. I think it's supposed to come out in May.
The deciding factors when buying a digicam are obviously cost and type of use. For web-only use, a very high MP camera is probably an overkill. If you intend to get print-outs then you have to decide on the size. If money is not a consideration and you want a truly professional camera, then an EOS 1Ds is probably the best D-SLR out there at the mo. On the other hand, $400-$500 can get you a pretty decent prosumer camera.