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When I got an Olympus C700 years ago, it had a 10x zoom and some kind of large digital zoom beyond that. I took lots of shots with the digital zoom, thinking how cool it was to be able to zoom in that far. Like you, I found that the pictures came out choppy.
A zoom lens in and of itself is a compromise. A zoom lens cannot maintain a completely sharp picture throughout the range of the zoom. Typically, when the lens is zoomed either all the way in or all the way out, the picture quality is not as good as you'd get by zooming somewhere in the middle. With each zoom lens, there's a "sweet spot". This is why on better zoom lenses, you'll see a smaller zoom range than you might expect. For example, the Canon 24-70L lens is large and impressive-looking, and many people upon seeing such a lens assume you can resolve the moon landing sites with it. Not true; it only has a focal length range of less than 3x. But the picture quality is amazing. On the other side of the coin, I think zoom lens engineering is better than it ever has been. I shoot mostly with a lens that would be considered something like 11x. And yes, there are the compromises I mentioned, but if you're not shooting for National Geographic, no one is going to notice. I bring all of this up just to point out that having a zoom lens in the first place is something of a compromise, and I don't think you'll want to use digital zoom, because it degrades the image pretty severely, in my opinion.
I'd go with the 3x optical zoom and crop pictures when necessary to make the subject larger in the final picture--the 10MP camera sensor will lend itself to fairly major cropping. Use the digital zoom for the non-artistic have-to-get-the-shot situations, such as newsworthy but distant events.
Enjoy the camera.
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