Anandtech did a review of “4 Ultra-compact Digicams”:http://www.anandtech.com/digitalcameras/showdoc.aspx?i=2473&p=1 and, like just about everyone else, they paid absolutely no attention to the quality of the movies.
As I’ve written before, I think “ignoring the movie capabilities”:http://www.geekfun.com/archives/000588.html of the latest generation of digicams is a big mistake.
With their compact “go-anywhere” form factor and their ability to do 640×40 @ 30 or 60 frames per second for minutes at a time, they are a hell of a lot more handy than your average camcorder and reasonably competitive quality-wise.
Since my brother picked up one of the Canon SD400s, I’ve received many more clips of my nephews than in all the years they had a FireWire capable camcorder and they look pretty good too.
A camcorder will likely always have better low-light performance, better audio and a wider range of optical zoom, but I think the movie featuers on digicams are already more useful for most of the footage consumers capture.