If your can afford it, I would go for an HD camera. The new Sony HVR V1 seems like a good all rounder.

http://www.dvuser.co.uk/content.php?CID=141
http://www.showreel.org/memberarea/article.php?218

Ideally you want a camera with audio xlr 3pin connectors rather than 3.5mm jack inputs to record decent sound via a decent mic such as the sennheiser ME66

Another camera to consider in the price range is the Canon XH G1. The Panasonic HVX-200 is a popular but more expensive camera used quite a lot by Indie filmakers. The canon XL H1 is also a good camera but expensive as is the JVC HD110.

You could look around for a 2nd hand panansonic dvx100 which are decent cameras that give you plenty of control and has been used in plenty Indie features, or a Sony PD170 (though needs extra lens if your want true widescreen footage)

Okay. The above may not be the cheapest but you can get good pro results out of them.