Unfortunately Good AND Cheap rarely fall into the same category. From what I read and from what I see higher end DSLR cameras have stunning video quality and being able to use your lenses allows you to get great depth of field in your video without having to spend very big bucks on a pro level video camera. Th 5D takes fantastic video and I believe there was a major television show that shot an entire episode using a Cannon DSLR. I forget the name but it was on par with an ER or Law and Order level show I believe.
If you are hoping to get quality video qith a point and shoot you will be disappointed. And the comment about digital zoom is 100% correct. Digital zoom in my opinion is pointless.
You could always go with a midlevel DSLR that has video like a D5000. That takes HD video however when you thrown on a couple decent lenses you are still in the $1000 ballpark.