Why on earth would you want to buy a Camcorder when most digital cameras can record movies. Good question. A Camcorder is superior in a couple of ways; first - recording time. A Camcorder can record up to 2 hours or longer on a 32Gb SDHC card. However, the quality is not nearly as good as a digital camera, so there are some trade-offs when selecting a digital camera. The second reason is Dolby Stereo, which is not a feature generally found on the digital camera versions. In fact, when you add all of the intrinsic features inherent in a Camcorder, such as Image stabilization, generally fast lenses, zoom capability, time-lapse photography, and night-recording capacity all add up to features not often found in a digital camera.
Overview: The model I have, a Canon FS-20 is no longer made; the FS31 is it's replacement. Marketing hype advertises the FS20 as having a "48x Advanced Zoom"; which is a zoom mode using a combination of optical zoom and a very slight amount of digital zoom; but not enough to lower the picture quality. The FS20's specifications indicate a 37x optical zoom, which is the same as the FS31. Still, a 37x zoom is quite powerful; much more than you will ever likely find in a point & shoot; or even in a DSLR without changing lenses.
Most Camcorders generally have low pixel count sensors, compared to digital still cameras. Even a HD video images start out at around one and a half to two MegaPixels of data. Even 12Mp still cameras with video modes usually shift to a lower quality image in video mode which doesn't use all of the pixel capability of the camera. The fact is that you don't usually need as many pixels in video as you do in still because your eye disregards most loss in quality in movie modes, whereas the eye is more discriminating when viewing photos.
Fact is, video in concept is not unlike MP3 players in that they are "lossy". In reality a video is just a collection of still shots, but at a high rate (24 frames-per-second is popular). The sensation of motion at a high rate gives the illusion of smooth movement. In reality each frame is a significantly lower pixel count photo than you will have with a still photo. Your eye tends to blend any defects so that you don't notice them. Conversely, when you view a still photo, your eye is more discriminating, and you can pick out defects so easily that higher MegaPixel sensors need to be used to produce a satisfactory image.
For example (and you may have to reload this page to see it), before you begin the movie below, look at the first frame, which is a still photo. You can see that the quality is not that good. But when you begin the movie, the quality seems to improve. Part of the difference is because YouTube tends to compress the files, further reducing quality. But it is still an effective example of how video movies do not need the megapixel count for quality pictures that still photos require. The effect is compounded due to the conversion to YouTube, but you get the idea of what I mean.
Camcorders generally have a feature that is not very useful; snapshot, where it can take a still photo. But at 1 MegaPixel, the quality of this snapshot is going to be much lower than even digital cameras that cost under $100. Still, if you want a long zoom photo, given the Camcorder's 37x zoom lens, it can't be beat (however you will certainly neeed a tripod at full zoom).
Panning: With this camera, I have noticed that if you pan too fast, the picture can noticeably pixelate. This is likely due to a slow sensor. So smooth, slow panning works out better (which is more pleasing to view anyway).
In the example below, which I took with the Canon FS20, you can see some pixelation. In the second half of the clip, as we are approaching port, watch the sky. You will see what looks like the sky flashing a bit. Look closely and you will see some pixelation when the sky "flashes". Processing and conversion to YouTube exacerbates the effect significantly, but it is still noticeable in the original - just not to the extent you see in the video.
File format: Unfortunately the Canon FS Camcorders record video in a proprietary format. You cannot pop the SDHC card out of the Camcorder and play files in the MPG format on your computer. You must download the movies to a download software (included with the Camcorder). This software converts the movies to MPG format during downloading.
SDHC Cards: The solid state nature of the Canon FS20 Flash Memory Camcorder means there are no humidity issues to contend with - at least in respect to tape. In the tropical-humid Caribbean, this is a good thing. I ruined a Hi-8mm Camcorder on one trip to the Caribbean when I walked outside of an air-conditioned area, and did not let the Camcorder stabilize long enough for the change in humidity and temperature. The tape jambed in the transport mechanism, which ended up busting a cheap nylon gear.
Summary: While a digital camera is arguably as good or better than most Camcorders today, they don't generally have the length-of-time capability or features normally found on Camcorders. Given those characteristics, Camcorders do fill a niche, however small it may be. And with the low cost and small size of modern Camcorders (at least of the Flash Memory variety), there is no reason not to have one in your camera bag.