Eeww. I don't envy that journey. We started that a few years ago and I found many hurdles to have to investigate, from the digital cameras, and storing the videos on my computer or burning them to disks, different software to do the burning/copying and electronic files, etc. There were converter files and computer software upgrades needed, etc...all at a huge expense. We opted NOT do do the traditional camcorder.
We bought this:
http://www.puredigitalinc.com/
It's handheld, under $100., records up to 30 minutes of video with audio, stores them onto your computer using it's own software and converter for your t.v and computer, you can burn them to a disk for storage, view them on the computer or send them via e-mail, and it's really easy to use. My 4 year old can run it. It's not the greatest quality, the screen is small, and it doesn't soom very far, but it's great to capture those little moments without taking up the cost, space, etc. I LOVE mine. For the money...it's a GREAT product. Infact, when I got mine a year ago, my entire family fell in love with it and they all went and bought one too. It can fit in your pocket and it's super affordable. You can get them at most stores, even Target has one. It might not be this newest version, but it's basically the samething. Good luck.