Photo cameras currently have good photo quality and bad video quality. And video cameras what still quality do they have? See yourself at this Flickr page. Not so bad isn't it? This is a quality you would also get from a tiny point and shoot. At closer examination you'll see the problem of small sensor cameras (and video cameras have ever smaller sensors): loss of detail. Look at this dog the fur is smoothed by heavy noise reduction that basically works like Photoshops surface blur filter. I don't want that and therefore video cameras would also benefit from larger pixels.
This particular camcorder - the Canon HF100 - records AVCHD video on SDHC cards and JPEG still photos. It's tiny 1/3.2" sensor has 3 Megapixels but effectively used (because of the way Bayer pattern sensors work) are just 2/3 or about 2 Megapixels. This is exactly the size of full HD but the 3 Megapixel still photo size is obviously interpolated.
