I have a zr40. I think its great, but if you want better image quality go for a camcorder with a bigger lens.
I am very happy with the ZR40. I have also used a similarly priced panasonic. I must admit the panasonic produced a better picture, but the camera was quite a bit bigger. Also the panasonic was not fully compatible with FCP, or early versions of iMovie. Compatibility is still not perfect but much better than it used to be.
For a low end camera, I would not hesitate to get the ZR40. Its fully compatible and great quality. I LOVE Canon products.
Make sure you have good light. Dim light makes low end DV cams beg for mercy.
BTW
I have just recently used a Canon XL1s. Wow. Simply amazing, you can't even compare to a low end camera.