hmm when u use digital zoom the dc is actually trying to use ur bigggest image and try to enlarge it. So for a 4mp cam u have more image info for the cam to enlarge unlike a 2 mp cam.
Try this in PS it will be easier to understand. Use a small image and resize it bigger, u will find the image quite bad look cause the computer is trying to think how to fill in the missing pixels but there is no image imformation avaliable. SO it tries to guess base on the surrounding pixels.