The mini-DV tape based HDV consumer camcorders can record in 1080i high definition or regular standard definition (480 lines).
At the moment the camcorders, of note, which fall into this category include, but are not limited to: Sony HDR-HC1 (what I use, no longer made - though apparently still available if the vendor bought stock and still has them), HDR-HC3 (2006 model), HDR-HC5 and HDR-HC7 (just announced at CES), Canon HV10. There are others, but for this post, I'll stay with the less-than-$2,000 units.
The high-definition video transfers from the camcorder to the computer (for editing) using FireWire/IEEE1394/DV port/iLink (all essentially the same thing). Your computer needs to be appropriately equipped with a FireWire port. The USB connection is for transferring stills from the memory card.
Yes, according to the Sony Vegas web page, it will edit high-definition video in HDV format <http://www.sonymediasoftware.com/products/product.asp?PID=408>. I understand Adobe Premiere, the appropriate CyberStudio package (Producer?) and other Windows-based video editing applications are capable of editing HDV formatted video. I use a Macintosh G5 flatpanel iMac and the bundled iMovie HD (as well as FinalCut Express and FinalCut Pro which can be purchased separately) edit HDV formatted video, too.
Looking at the press releases from CNET and camcorderinfo.com, the Sony HDR-HC7 looks interesting. Bigger CMOS imager, mic-in, headphone jack, among other features... But at the moment, I am considering stepping up to either a Canon XH-A1 or Sony FX7 or FX1.
Based on http://www.camcorderinfo.com/content/Sony-HDR-UX7-First-Impressions-Camcorder-Review.htm
I need to withhold judgment on the hard drive based and DVD based camcorders because of the stated AVCHD compression image degradation. Along with that, there are currently no applications available to edit AVCHD-based video. They are supposed to be out "soon", and several companies have stated support, but there is nothing available of which I am aware. Interestingly, Sony used to have a link from the Vegas page "Special note about ACVHD" or something like that. The link is gone, but the page is still reachable... http://www.sonymediasoftware.com/products/product.asp?PID=404&PageID=40
and the "Supported formats at the Sony Vegas page now has a checkmark on "Advanced Video/Audio Coding (AVC/AAC)" - though I don't know if this equals AVCHD/H.264...
And AVCHD is not listed here - yet... http://www.sonymediasoftware.com/products/showproduct.asp?PID=977&FeatureID=8315#all
That said, the newly announced JVC hard drive based camcorder also looks interesting, (no AVCHD) <http://www.camcorderinfo.com/content/JVC-GZ-HD7-First-Impressions-Review.htm>
but JVC rigs have not historically provided good results, though this one looks like it might have a good shot - so withholding judgment here, too...
If you decide to go down this path, be aware that you need a REALLY fast CPU to import and render high-def stuff. Also, available hard drive space for projects is a must. One hour of HDV is over 30 gig on a hard drive. External FireWire drives are acceptable; internals are great, too. And last: for the most part, when you render thihigh def video to *most* single layer and double layer DVDs today, that video will be downsampled to standard definition... REALLY CLEAR standrad def, but still standard def. The only BluRay-capable burner I am currently aware of is in a Sony machine... I am not aware of any HD-DVD burners available for any personal computers. And the players are still too expensive. A way around this is to export the project to you computer's hard drive - and play-back through your computer (if you have either HDMI or component connectivity out to a HDTV or monitor...
Sorry for the "long answer to short questions"...