So, I pulled some experimental video I shot on my Canon EOS500D DSLR (an enthusiast level camera, available for around £500) out of Aperture, and edited it up. It was shot hand-held, with some image stabilization applied in iMovie during the editing process:
And...I'm quietly impressed by it. The quality is pretty good (as you'd expect with a decent lens on the front), and it's actually easier to handhold than some of the Flip-style cameras, because it's easy to get two hands on it. One shot near the end betrays how difficult it is to handhold at the further end of a telephoto zoom. With a tripod, you could get some really nice footage off this thing.
Room for more experimentation, I think.
There's a YouTube version after the jump, for those of you on iPads and their ilk...