HD digital camcorder
Take a very serious look at the Panasonic TM900. After seeing it mentioned on the "video" DPR forum, I bought one. It's a big step up from the usual "prosumer" camcorder. It's not a pro level camera, because it still has a small sensor and therefore has the limited dynamic range we've some to accept with compact cameras. But its color, sharpness, and ease of use are probably the best among "prosumer" camcorders.
If taking an occasional still image with your camcorder (don't do that, except in desperate situations!!) isn't a priority, also take a look at the Canon HF G10, supposedly better in low light - but the Panny beats it in sharpness, and my experience with the Panny (on manual settings) makes it hard for me to believe that the Canon could handle low light much better.
Read several reviews, and read them carefully. You might decide for the Canon. Although I don't take still pics with my video camera, I opted for the Panasonic, and I'm very glad I did. I bought my TM900 used, from Amazon, and I couldn't hope for a better camcorder - for my family videos. If I were a pro, I'd definitely want one of the $3000 to $10,000 pro level cameras.
Ithaca NY, USA