For my own experience, a camcorder can not deliver high quality stills. Although the CCD basics are the same, they are designed for video or stills.
For professional video, you'll have to get a 3 CCD camcorder. They are over US$2000.
For stills, I have good experience with the Sony DSC-S75 and I am going to switch to the DSC-F707.
The DSC-F707 is a 5 Megapixel camera.
I've read that Nikon among other are OK.
As Geist3, I also have the Pyro card. If works fine and it is detected for Windows 2000 without ny aditional drivers.
For software, I tried Premiere, Ulead (wich came with my card) and Vegas Video.
At this moment, I prefer Vegas Video. It is very easy to use. Lets you change video parameters like color, contrast and audio filters while running the video. This is done without any speciall hardware (I hava a PIII 1 GHz with 512 MB RAM)
You can download the demo at www.sonicfoundry.com
For video editing, you'll need lot of harddisk space. One second of DV takes 3.7 MBs.
You mentioned £1000, but I have expended much more than that. THis hobby is expensive.