Yes, 2"x2", regular US passport photos are fine for OCI applications.
Indian Cunsulate NYC still asks 35mmX35MM size photographs with light color background, not white background
http://indiacgny.org/php/showContent.php?linkid=174&partid=100&sub=sub6
11. The applicant is required to submit the OCI application (Part A and Part B) in duplicate form. Part B is automatically printed out when Part A is saved and the print command is selected at the pop-up window. For each of the two applications, an original 35mm X 35mm size color photo (light color background, not white background), without border with front view of person's head and shoulders showing the full face in the middle of the photograph is required. At the end of Part B, there is a list of documents that are required at the time of submission of application. The fee for the application is US$ 275 (US$ 145 for PIO Card holders). The payment should be in the form of certified checks or money orders in favor of "Consulate General of India, New York" (no personal checks).