This is our first HD camera, so we didn't really know what to expect. (Note that for video review, we played the output via HDMI to our Sony Bravia 46" HD TV.) In full light, the picture is fantastic; you get some blur and artifacts during movement or in shadows, but I don't know if that is normal or not for an HD camera, so I'll take that at face value. Night shooting without the IR light (Nightshot) is pretty grainy, even with an add-on light. The Nightshot IR functionality works great and is a lot of fun to play with. The built-in IR light seems to work well up to 7 or 8 feet and then drops off.
Still shots are pretty poor; even in picture mode, they look like video captures; the contrast and color balance are bad compared to a dedicated still camera, but that seems to be common with most if not all dual use cameras so, again, take it at face value. Note that it does have a built-in flash (I couldn't find that documented anywhere).
It is small and light; you can almost stick it in your pocket, even with an extended life battery. Contrary to the CNET review, I didn't have any issues with the touch screen functionality.
Video and still import work fine; I had to buy a different firewire cable (the one included has the small end on each side, my PC has a large firewire connection). The Picture Motion Browser did not work; it crashed with an error when trying to open on Vista. Sony were absolutely no help; they just kept sending me to knowledge base articles that were of no use, and refused to make any effort to help (given that I just dropped $1500 on camera and accessories, you'd think there would be more love there).
On the whole, I'm pretty happy with the camera, although I'm disappointed that I have to carry two devices to get quality stills, and I'm very frustrated with Sony's support for their worthless software. But, at the end of the day, I paid for an HD video camera, not a still camera or software...so, four stars for the video functionality.