1) You mention digital zoom. Forget it. It's a waste of time. Never, ever use it.
2) AA batteries or lithium. Well, the lithiums will last longer, which is their main feature. I personally like to use these batteries, but the down side is that they're often made specially for that camera (or a very select range). If you lose it, you could be in trouble if abroad or somewhere. With AA batteries, they won't last as long, but you can buy them everywhere. If you go this way, go for rechargeable AA batteries.
3) Personally, I'd go for this one:
http://www.amazon.co.uk/Casio-EX-Z75-Digital-C amera-Optical/dp/B000MVWE8I/ref=br_lf_m_100017 6213_1_1_img?ie=UTF8&m=A3P5ROKL5A1OLE&s=electr onics&pf_rd_p=192703991&pf_rd_s=center-2&pf_rd _t=1401&pf_rd_i=1000176213&pf_rd_m=A3P5ROKL5A1 OLE&pf_rd_r=1MQXQDWD0QN3S91NJN2K
If you can stretch a little further, take a look at this:
http://www.amazon.co.uk/Panasonic-DMC-FX30EB-S -Digital-Camera-Antishake/dp/B000PKIQFG/ref=sr _1_5?ie=UTF8&s=electronics&qid=1211361850&sr=1 -5
In short, Casio make great compact cameras. All Canons are good. Fuji make some good compacts too, that excel in low light conditions (think: restaurants). A lot of the Panasonics give good results, especially their more expensive ones. And stay away from Sony and brands like Vivitar.
4) XD vs SD. SD is wildly more popular, and XD is usually the format Fuji uses. Personally I'd alway