About three years ago I purchased a Canon ZR40 for about $400. We had an upcoming trip to Europe and I didn't want an expensive camera in case it was lost or stolen. The Canon easily fit in a jacket pocket, and more recently has been mounted to the roll bar to capture on-the-road video from my kit car.
http://216.180.55.64/driving_29.wmv
The ZR family is now up to about "100" or so but you can still buy a member of the ZR family for less than $400. Since the Canon was my first digital video unit, I was amazed at the quality of a production that could be produced on a PC.
It really isn't necessary to spend $800-1000 just to get a high quality video image. The image quality of the lower cost cameras is comparable to the higher priced units. More money buys more bells and whistles but the image quality of any of the DV cameras is far beyond the older analog cameras. If the video file is compressed for internet distribution, the image will be considerably degraded anyway.
Editing on a PC is really cool. I can now easily and inexpensively produce videos that are far beyond what was practical 18 years ago when I offered video services in my business.
Sam Buchanan
http://sambuchanan.com