Commenting on the video quality of Canon's latest HD camcorders almost seems like an afterthought nowadays. Since the arrival of the HF10, the company has led the pack in this respect. Whilst Panasonic, JVC, and even Samsung have almost caught up, none has overtaken, and the introduction of 24Mbits/sec has increased Canon's lead just that little bit more.
In the best lighting, footage is vibrant and extremely detailed. Colours are quite saturated, but you can always choose a more naturalistic look using the Image Effects. The biggest revelation is the low light performance. Although grain does become increasingly visible as the level of illumination drops, this is fine and uniform, so it doesn't damage the picture too much. This means there will be few conditions where you can't shoot usable footage with the HG21.
You will also have no trouble editing the results. Now all the major editing applications support AVCHD - even Adobe Premiere Elements 7. Even the 24Mbits/sec top setting causes no problems. So this is high quality footage anyone can edit.
Overall, though, the Canon HG21 really isn't that different from the HG20. The viewfinder will come in handy when shooting in bright conditions where the LCD becomes hard to see, and you get twice the storage. But this is not enough to make up the near-£300 price increase over the HG20. Throw in a standard-sized accessory shoe instead of the Canon proprietary one, and a lens ring for focusing, and we'd be more easily swayed. Without these, though, the HG20's much better value wins hands down.