There is no one single device that can do both photo and video perfectly, or fit all situations. There is always a flaw for these wanna-be hybrid devices. If you are not too picky, then you can certainly survive with one device (they do give decent quality performance, good enough for most casual use).
I have a couple of D-SLRs, a couple of HD digital camcorders, and a few PS cameras. They are all for different purposes and uses.
My HD camcorders get excellent videos, and they are superior to my D-SLR or PS cameras for sports and motion videos. But its photo ability is somewhat limited/basic and there is no control over the depth of field (due to the small sensor). You can certainly get digital stills from camcorders (either use the dual mode function or extract a frame from the clips), but its photo image quality still lags behind my D-SLR (they have similar quality to my PS cameras instead).
My D-SLRs get excellent photos, and the HD video on the Canon 5D Mark II is excellent. But its shallow depth of field makes it not a good sports video device at close range. It is however adequate for most daily casual clips.
Here are a few photos with shallower depth of field that HD camcorders cannot easily get:
Yes, there are softwares like Alien Skin and Photoshop to isolate and blur the background to create the Bokeh effect, but it takes some effort and computer skill to make it look natural and believeable.
For my son's sports games, I carry both D-SLR and HD camcorders. But for most other family shots/vidoes, I can just carry the Canon 5D Mark II. However, when I go to formal events and galas, the PS camera is way more cool and light to carry than either the D-SLR or camcorders (at least to avoid being mistaken as the event photographers). And for casual day trips, scuba diving and rock climbing, I usually use the Canon G10 to minimize the bulk and weight.