Poor low light performance is the number one complaint of people buying or using camcorders, so it's no wonder that this is such a hot button topic. As a general rule of thumb, camcorders with larger video sensors (CCD's) have better light gathering ability, and therefore perform better in lower light situations. Remember the cheaper the camera, the smaller the sensor will generally be, which explains why lower budget cameras have such difficulty delivering non-grainy, quality video in dim lighting (this includes indoor settings, theater filming, etc.). For a more mid-range option, you might want to consider the Sony HDR-HC3 (or HC7) camcorder. Although significantly more reasonably priced than Sony's previous consumer HD camcorder, the HD3 still offers excellent 1080i HD video quality. Most importantly (at least for this thread), it has a built-in intelligent flash that improves clarity and detail, and reduces shadows when taking low light pictures. Combine that with a 10x optical zoom (80x digital zoom) and you have the basic foundation for a quality dim lighting camcorder than won't break the bank.
The HDR-HC3 has a successor, but the HC7 has more pixels packed into a similar sized CMOS chip which many say makes for less than stellar low light performance. However, there are supporters on both sides of this debate - for the sake of keeping within a "lower budget" camcorder, the HC3 is still a good bet to provide decent image quality in low light settings. The HC3's superior performance over less expensive camcorders is partly due to the 2.1 megapixel 1.3" ClearVid CMOS sensor which is larger and more powerful than the small CCD's in other models. In addition, the 2.7" wide LCD display allows users to clearly view footage from many different angles as you are shooting for better video monitoring. These features, in combination with a SteadyShot Image Stabilization System that compensates for camera "shake", make the HC3 a powerful camcorder even though it is one of the lightest and smallest models in the industry. Another interesting feature for customizing image quality is the assignable dial which can be used to control exposure, focus and white balance shift.
When it comes to taking the best quality video possible in lower light settings, there are several higher end cameras that will deliver better performance. The Canon XHA1 delivers some of the best low light quality, but is considerably more expensive and much larger in size. An alternative option for getting better low light results is to drop the shutter speed to 1/30, 1/15, or even 1/8 to collect more light for each pixel, which will retain the image sharpness. If dim light performance is of particular importance to you, it is preferable to have a shutter speed control option on the camcorder - keep in mind that this generally will raise the cost though (e.g., the HC3 does not allow user to manually control shutter speed whereas the HC7 does). The choice ultimately depends on how low you're willing to go before poor low light performance becomes a major issue.
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