I had a HC1 for a while... even got into putting a dof adaptor on it to give it shallow depth of field with canon fd lens's....
here's my take;
on daylight... the image is remarkable.... near what you'd see on HD channels.... but there were some problems rendering red.... had a purpleness to it.... not really fixable in post without hurting other colors. ( I've heard HC1's with serial numbers past a certain point were better... firmware? and that the hc3 does not suffer the red problem )
in low light..... resolution would drop..... putting the cam on "sun & moon" setting would keep the gain down and look more natural.
I've moved up to the z1.... complete manual control ( I'm a still shooter by trade, and shoot manual .... hassy ) and better low light handeling.
If you just want a cam for fun and family.... the HC1 and HC3 are both incredible..... and the new canon small HD is king I here ( camcorderinfo.com )
here's a part of a project I shot with the HC1.... useing the dof adaptor and nattress plugins in FCP....http://www.witzke-studio.com/hd/difrenzi-web.mov
just a warning!.... look out! once you get into shooting HD, you'll get hooked and start dreaming of all the possibilities.... shooting product spinning, indie films, documentaries..... and you'll want a bigger tv..... and an hd dvd player..... and a popcorn machine...... and a fluid head tripod.......