There are three separate settings that relate to mouse zooming.
One is located in "Universal Access" pane of System Preferences.
One is located under "Universal Access" in the shortcut tree of the "Keyboard Shortcuts" tab of the "Keyboard & Mouse" pane of System Preferences.
One is located under "Mouse" tab of the "Keyboard & Mouse" pane of System Preferences, if you have a Mighty Mouse or two finger trackpad.