Looking for a digital camcorder / digital camera combo

My digital camera is due to be replaced soon, and I also find myself looking to add a digital camcorder to the mix. Since I tend to use such products most often while traveling and I’m looking to travel light these days, I’m exploring the possibility of buying a single device that does both. I know that such combo devices have been on the market for years, but that until recently they were something of a compromised novelty – you either ended up with a camera that also (poorly) did video, or a camcorder that also (clunkliky) did still photos. I’ve been told by a few folks that those days are over and that you can now buy a single device that is fully functional as both a camcorder (DV tape slot, firewire port, iMovie compatible) and a camera (memory card slot, USB port, iPhoto compatible).

And so I’m looking both for advice on whether such devices are all that they’re cracked up to be, and advice on specific models that’ll get the job done. I’m looking at the Canon ZR850 in the online Apple Store, which sells for about three hundred bucks and claims to do everything I need it to. I like both the price and the size, and since Apple’s selling it, I’m assuming it’s as software-compatible as I need it to be. I know there are tinier ones out there that sell for closer to a thousand bucks, but I’m not interested in paying such a huge premium just to get something a bit smaller; it’ll be good enough that I can get one device that takes the place of two. And as much as Steve Garfield likes the Nokia N95, I don’t need one that’s also a cell phone. Advice welcome.

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