Canon! Canon! LOL. But really, I think one of the Canon Powershots would suit you nicely. The LCD screen is a decent size. My two older powershot models have 3x optical zoom (optical is the one you want. Digital zoom means nothing). I haven't looked into the newer models but I'd imagine that they'd have the same, if not more. As for batteries, they use AA's (my two use four of them.. but again, I'm not sure what the newer models use though I'd imagine it'd be the same). Movies have sound and the picture quality is amazing!

And you're right, the average person doesn't need anything higher than 2mp but it's very rare to find a new 2mp camera in stores these days. I've seen quite a few ads on buysell.com for some of the older canon models (Canon A60, A70, A75, A95).. all would suit your needs.