Lots of camcorders include the ability to shoot still images, and most digital cameras can record video. But, so far, neither does the other's job that well. The latest cameras offer greater resolution in a more compact form factor than any camcorder, but their video is almost always grainy, too heavily compressed, and maxes out at a VGA frame size. They also generally offer rather wimpy zoom factors compared to the 10x or more sported by the majority of camcorders.
But the barriers are beginning to break down at last. High-end digital cameras are arriving which can not only compete with professional camcorders - but actually exceed their capabilities. Take a look at the video here, and download this sample footage (170MB file). Both were shot with a Canon EOS 5D Mark II digital SLR. Bear in mind that, in the first case, you are watching a compressed version of this footage, at a quarter of the original resolution. In the second example, the footage is at full resolution, but compressed to a third of its original data rate.
See if you can spot any of the graininess associated with video shot in low light. But also watch out for pin-sharp focus, which homes in on precisely which part of the frame the cameraman wants you to look at. We also suspect you will be impressed by the dynamic range, which is richer than most video cameras can produce.