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I have this camera and I both love it and hate it. On the good side, if you are shooting in good lighting conditions, then your footage should be good. The HD video is vey nice. However, the low light capabilities are poor, and are exacerbated by the fact that the gain control is totally automatic – no manual. So, whenever you open the iris up you can end up with lots of noise on your footage. The included microphone is good, and audio does sound nice.
Skill of shooter will always trump limitations of the camera – I’m still learning how to really use mine. If you go to Vimeo and other places, you can find some fantastic video shot with this camera. Another option might be a Panasonic AG-HMC 40. It’s about $2200, but has 3 1/4 CMOS, and shoots on SD cards. It’s brand new though, so I haven’t seen any footage from it yet though.