Raman spectroscopy, x-ray diffractometry, atomic force microscopy, photoluminescence spectroscopy and reflectance spectroscopy have been used to characterize ZnO thin films grown by pulsed laser deposition as a function of the post-growth annealing temperature. Raman results show enhancement and broadening of certain Raman features which correlate with changes in the widths of the x-ray diffraction peaks for samples with varying grain size in the 50-100 nm range. These data suggest that electric fields, arising from charge trapping at grain boundaries, in conjunction with localised and surface phonon modes, are the cause of the intensity enhancement and asymmetry of the Raman features. Band-edge photoluminescence and reflectance spectra also altered considerably with increases in grain size, showing clearly observable excitonic structure in the reflectance spectra. An analysis using a deformation potential Hamiltonian demonstrates that the experimental exciton energies are not explicable solely in terms of sample strain and give additional evidence for electric fields in the samples due to charge trapping at grain boundaries. This is supported by theoretical estimates of the exciton energy perturbation due to electric fields and also by the behaviour of the green band in the samples. Detailed studies show that reflectance spectra in nanocrystalline ZnO differ substantially from bulk material. Interaction of excitons, damped by strong electric field effects, with photons leads to exciton-polaritons with substantial damping, eliminating the normal Fabry-Perot structure seen in thin films. Good qualitative agreement is achieved between the model and data and the conclusions are also in good agreement with the photoluminescence and Raman data. Finally, high intensity optical pumping data of these samples again shows a dependence on grain size. All samples show evidence of high excitation effects and the sample with the largest grain size displays random lasing at room temperature. All our results indicate the very strong influence of electric fields due to charge trapping at grain boundaries on the optical properties of nanocrystalline ZnO.