I may not get this exactly right, but I'll try...
Optical zoom actually zooms in on the image, just like a 35mm zoom does.
Digital zoom doesn't really zoom in on the image, but just makes the pixals bigger.
The end result is that optical zoom provides a clearer picture than digital zoom.
The number of pics you can fit on a single compact flash card depends on how much space each picture takes up, and the amount of memory on the card.
With my Kodak 4.0 MP, I can get approximately 90-100 pictures on a 128mb card. It does have settings for lower MPs, so you don't have to use the 4.0 MP setting all of the time, if you don't want to.
Generally speaking, the greater the MP of the camera, the larger the file size of the pictures. That's a trade-off for the higher resolution you get with higher MP.
I've read that the Kodaks are rated as one of the easier makes to use, and I would agree. Taking basic pictures if just as easy as a 35mm, and making other more detailed adjustments using the menus is not that difficult either.
Last I checked, the Kodak DX4900 was running between $360 and $400, but that does not include the docking station, and only includes a 16mb Compact Flash card.
I'm not sure about the other Kodak models that others have mentioned, but they are less expensive, which would allow you to get the docking station or card reader, as well as a larger Compact Flash card and still stay around your budget.