I can also confirm this behavior w A570 101a & build 50. Annoying!
As per digital zoom... very useful in movie mode... I certainly don't want to crop avi files! Also, combined optical+digital zoom vastly increases zoom range. VERY desireable!
(also, as an author noted, even for stills, digital zoom is very useful for finding/composing potential shots... even if you decided zoom out and crop in PC later ... as I do! Also, for transient potential shots outside of optical zoom range, your ability to see and capture is greatly enhanced, even if quality is compromised.)
BTW, Great product guys! I just dl'd and installed and am now playing with settings. Main feature I was trying to find was RAW, after spending countless hours trying to save some important shots in PSP & Elements from a recent disney world trip. So I'm VERY VERY happy

If anyone's interested, I'm uploading shots from that trip (mostly) to:
Photo Gallery by David Van Camp. Hopefully, I'll be adding CHDK-aided shots soon

thanks!
dvc