Image stabilization compensates for shaky hands or other movements, and this is an important feature for the smaller camcorders because they tend to be more difficult to hold steady. If the camera you buy has image stabilization, make sure that you can turn it off if you like. There are three types of image stabilization: digital, electronic, and optical.
Digital image stabilization (aka. Time Base Correction)
Digital image stabilization is the most common and, unfortunately, least effective stabilization technology in today's consumer-quality digital camcorders. With digital image stabilization, the image is magnified slightly and only a subset of the actual picture is recorded as the extra movements are subtracted from the image; as a result, the quality of the video (the resolution) can be compromised-bringing a listed 650,000 pixel resolution down to a true resolution of as low as 400,000 pixels, which is still far superior to most 8mm and all VHS video.
Electronic image stabilization
With electronic stabilization motion sensors recognize and help the camera to compensate for camera movement, and as a result auto focus functions can be significantly slower.
Optical image stabilization
Optical stabilization is accomplished by a prism assembly that moves opposite the shaking camera. Of the three, optical is the best because the image itself is not compromised.