I'd never recommend using digital zoom. Digital zoom essentially is not using your camera's entire sensor, which results in much lower quality, a lower resolution, but a smaller file size. I'd always recommend capturing the entire scene and cropping it in Photoshop or some photo editing software after the fact. That way, not only do you have access to the original file if need be, but you also get much higher quality because as opposed to only using a few pixels on the CCD with digital zoom, you've used every pixel on the sensor. That results in better quality, and much less noise.
Here's an example that I found online by a fellow named
Larry Shone about digital zoom vs cropping:
Click to view quoted image
As you can see, cropping results in much better quality. While you may still be able to get "clear" shots with digital zoom by not moving the camera, the quality will degrade significantly. The only real advantage to digital zoom is the smaller file and the convenience.