If you've ruled out Eva because of your friend's daughter, I'd consider ruling out Aoife too. It sounds a lot like Eva (in some accents more than others) and can be mistaken for it (by the uninitiated). It's a pretty name - expect a small spike now Una from the Saturdays has named her daughter it. Aoife's really popular in Ireland (top 10) - it might indicate a future rise here.
In case Irish names are your thing, you might want to think about Caitlin, Ciara, Saoirse, Niamh, Roisin, Erin, Clodagh, Tara, Orla, Orlaith, and Sinead. I think they are all very adaptable in England.
From what you've said, I like the idea of using Olive as a first name. It sounds soft and pretty, is easy to spell, honours a family member, and seems familiar because of Olivia's popularity. I like it. It's a shame your husband doesn't! The further you get from Olive, the harder it is to pin it down to honouring your husband's late mum but you might think one of the following would do the trick:
Odette
Olwen
Oona
Ophelia
Oriana
Ottilie
You could even give your daughter the same initials as her late grandmother too. You might like a name ending in O - there aren't too many for girls but there's always Cleo.
In ancient Greece, the olive was a symbol of Athena as well as a token of peace and fertility, and olive wreaths were awarded to the winners at the Olympic games. So Athena or Olympia (fitting with London 2012!) could be unusual ways to honour Olive.
But if you're not sure on Olive or Olivia, you could always 'save' the name in case you have a son later on and use Oliver or use it as a middle name.
I also really like Amélie as a first name - again, I really like the sound of it - but I'm not a fan of Eloise. It sounds a little bit harsh to my ears but I do like Louisa. It's just my personal preference and I think Eloise is a solid, sensible name (important criteria for me) nonetheless. There's also Heloise and Elodie is another one to consider - just gorgeous.
Other names that might fit the bill if you're not already sold on Aoife (following on from your vowel-heavy shortlist):
Ada
Aine
Aisling
Alice
Adeline
Anna
Eimear
Erin
Edith
Eliza(beth)
Emma
Evelyn
Ida
Ione
India
Iris
Isabel
Isla
Ismay
Ivy