As others have mentioned, you really need to add $20+ (for an SD card) to the price of this to compare it to Flip and other cameras with built-in memory (the Zi8 does have a small amount of onboard memory, but it's only enough to test the camera, not enough for any real use). That said, though, it's still a bargain.
First, and most importantly, the video (and audio) quality is exceptionally good for a camera in this price range. No, it won't compare with a $1000+ camera - but it compares very well with Flip and the like. My initial video was made by following my four year old around the house as she explained things to me. Bright sunlight to dark hallways to lit rooms, close to and far from the camera, still and active. We recorded (at 720p/60fps) for ten minutes, then connected the Zi8 via the included HDMI cable to the TV and watched. I was quite impressed. I wouldn't expect the Discovery Channel to use these to film the sequel to the Planet Earth series, but for recording kids, pets, outside events (I also recorded my dog running around the yard), etc., it does very well. Color fidelity is good, and the built-in audio had no perceived issues. Adding an external mic makes it even better (my daughters use one and attach a tripod so they can interview each other).
I'm a Mac user, so I can't speak to the ease of use of the included software, but I can say that the Zi8 connects easily to the Mac (the first time, I only saw the drive partition with the Windows software, but I ejected and plugged it back in, and from then on, I saw the image/video partition as well). The movies are all in H.264 format, so iMovie (or virtually any other video software) works well with them, and, as others have said, iMovie does jitter reduction well, so no need to waste camera batteries on image stabilization). Also, obviously, you can eject the SD card and use a card reader to import the movies and pictures on any OS.
Speaking of pictures... the picture quality is adequate, but very much in the cellphone camera quality range - I wouldn't use this to take wedding photos or to document UFO sightings, but it's fine for the things you'd use your cellphone camera to snap.
Ease of use is great, but I will admit that, at first, I took a lot of half-second videos because the camera begins taking video whenever you switch resolutions. Still, it's trivially easy to use.
I rate it five stars because, for the price (even including an SD card), I was very impressed with what came with it (cables, etc), with the quality of the recordings and of the camera, with the ease of use, with the external mic option, with the removable battery, and with the overall experience.
At under $200 with a memory card, it is currently the best of the pocket-cam options.
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