The VPC-HD2 records 720p “high definition video,” a term with increasingly broad variances in interpretation. While there is certainly no false advertising in the statement, the camcorder adheres more to the letter of the definition than the spirit, and falls far short of the better HD camcorders in the market. At heart, the VPC-HD2 is really a still camera with good video features. The 1/2.5-inch CCD is quite large for a camcorder, but on par with a point-and-shoot still camera. When you do the math, the HD resolution of the video, 1280 x 720, is less than 1 megapixel. The VPC-HD2’s great feat is simply recording a low-quality image in that resolution about 30 times per second, then saving it as an MPEG-4 file – an older, inefficient file type.

In bright light, the VPC-HD2’s video quality looked remarkably better than the first generation model, the VPC-HD1 – a small but happy point in its favor. Colors were saturated to a degree that most consumers will like. However, the camcorder had a hard time finding detail in shadows and darker areas. In low light, the image was a wreck of noise and is guaranteed to look bad on an HDTV.

The VPC-HD2 should have been designed as a simple point-and-shoot. Instead, Sanyo decided to load on manual controls with little thought as to their actual use. The camcorder’s interface is a mess. The menu layout is complicated and disorganized. One inexcusable error trumps the whole package, however. Unlike every other camcorder on the market, the VPC-HD2 does not offer live preview – the ability to see your manual control settings on-screen prior to recording. In practice, this means if you’re shooting in low light and want to adjust the shutter speed, you’ll have to make a guess as to the correct setting, then hit record and see how it looks. No good? Stop recording, readjust the shutter, and hit record again. Repeat until satisfied. This is required for most of the settings on the VPC-HD2.

Those who can make it past the frustrating menus and lack of live preview will be pleased to see the VPC-HD2 comes equipped with Shutter and Aperture Priority modes, a number of one-touch corrections and AE modes, noise reduction settings, a mic input with level control, and more. These would all be impressive features if the interface wasn’t so maddening.

The upright design certainly has gadget appeal, and the body is extremely compact and portable. The pocket-friendly size has its trade-offs, however. Keeping camcorders like this stable in your hand can be an issue. Also, the battery is enclosed, precluding the use of larger-capacity batteries. Sadly, the VPC-HD2 can’t stand up on its own without tipping. It must be in the hand or on a tripod.

Video and stills are recorded to SD or SDHC cards. Flash media is a great option for those who want to capture short clips to post on the Internet. They can be transferred quickly via the USB connection or a card reader. Though card capacities are always growing, the camcorder can only fit about 14 minutes per gigabyte.

Though few HD camcorders can match the diminutive size of the VPC-HD2, there are a few pocket-sized models that are more compelling. The Canon TX1, another still camera/camcorder combo, offers better interface and color although it uses an even more bulky and inefficient codec. The Panasonic HDC-SD1 is larger, but features far superior image quality and handling. The Sony HDR-CX7 is another flash memory model that also offers better image quality.

Pound for pound, it’s impressive that a camcorder this small can output a 720p. However, the flaws add up. For anything beyond the strictest point-and-shoot recording of video for the Web, your money is better spent on an ultra-compact from one of the larger manufacturers – Sony, Panasonic, or Canon.