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Especially for horror on a low budget, I don't think you'll need a top quality video camera.
The thing is, most people want their short films to look like a Hollywood movie, but they never will. You can either try (badly) to make it Hollywood-ish, or you can revel in the fact that it was shot on DV.
DV footage recorded using hand-held cameras, for example, makes things appear more 'real', almost documentary-like - a fact that Hollywood is only now picking up on (and I'm not just talking about Blair Witch).
In short, unless you plan on blowing your video up to 35mm filmstock, getting a top of the line camera isn't too important. Getting good actors and sound recording - as well as editing the damn thing - now that's the tricky part.
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