I get asked "What still and/or video camera should I buy?' quite often because of my work.
Most of the consumer cameras are not on my radar and new ones come out so fast, it is impossible to keep up with them, but...
Here is a reply that I often give to my friends, and I think it helps them sort through the choices.
Mini DV & Digital 8 (the only 2 high quality consumer format options)
The compression schemes are of similar quality and the potential of the images to look good are similar, but the Digital 8 cameras are intentionally marketed towards the lower end. Optics and premium features are kept to minimum standards on the Digital 8's.
If budget is your top concern, a Digital 8 camera is a good choice.
Personally, I will not buy a Digital 8 camera, because historically I have had a lot of tape transport issues with the old Hi-8 tapes (which are the acquisition media used in Digital 8 cameras). The tape transport issues of the old days may have been resolved, but I have never had a tape transport issue with the newer mini DV tapes.
Optical Zoom capability is more important to you if you care about image quality. Digital Zoom is an artificial zoom that merely uses software in the camera to blow up the highest optically zoomed image. The result is grain and pixelation when in the digital zoom mode. I always turn off the digital zoom on any camera I use that has it.
But... for casual shooting, some may enjoy being able to zoom in quickly and easily with the digital feature, even if quality is sacrificed.
In post (or editing) if you have appropriate software, you can digitally zoom in after you shoot the footage, if you desire a more dramatically zoomed in shot.
Optical is better than Digital again in this department for similar reasons as mentioned above.
If you think you will want to take stills in addition to video, many video cameras offer the option now. Most of them will shoot more than adequate stills for web use, but of course they will usually fall far short of the capabilities of dedicated still cameras.
If you do plan to shoot a lot of stills with your video camera, then I highly recommend buying one with a separate and removeable media card dedicated to the acquisition of stills. It will make your life much more hassle free when it comes to getting the images into your computer.
Smaller Camera = More Money
My bottom line advice...
Any of the Digital 8 or Mini DV cameras will shoot footage that looks darn good on a regular TV, no matter how cheap the camera is.
Consider your true needs and buy the cheapest option that falls within those needs.
Personally, I would give the optics the highest priority in making my selection.