What is the best kids camera for iMovie '08? Flip or, say, IXUS/Elph?

My kids love creating video clips and the old camera they use is beginning to fall apart and I'm trying to figure out what to replace it with.
USER BRIEF: The goal is simplicity and ease of use, so iMovie '08 fits the bill. Video and audio quality are of secondary importance. They do want to be able to crop their clips and string them together into a movie.
I was on the verge of buying a Pure Digital Flip camera but I've discovered a rash of threads in various forums describing problems importing Flip video files into iMovie 8. I don't really want to get my kids involved in a video conversion workflow if it can be avoided.
The other option is to buy a regular compact digital camera with a movie option. We have a Canon IXUS 70 (a SD1000 Digital Elph in the USA) that produced acceptable clips that iPhoto imports automatically. iMovie '08 trawls the iPhoto library for clips than can be used as fodder for iMovie projects. Pretty easy, I wonder if there are any drawbacks.
So, my questions are: is the Flip an attractive option in an iMovie '08 environment? Or should I give my kids a regular compact (and if so, are any of the major brands using codecs that are more or less iMovie-friendly than others)?

Here are some known issues:
My MAC Updater downloaded the new QT 7.4.5 on 5 Apr 2008. I have been making movies in iMovie, and then posting them to YouTube. In the beginning I uploaded the movies as MOV files but soon discovered AVI files (larger file and longer time to upload) had more clarity when viewed on YouTube. Once the new QT 7.4.5 downloaded all my AVI files had picture, but no sound! I downloaded the Perian component as posted in QT discussions. The sound returned to the AVI files. However, when I Exported an AVI movie from iMovie the picture quality was worse than the MOV movie. There is something wrong with the new QT 7.4.5 when working with AVI, my AVI movies look terrible. These AVI files were all downloaded from my Ultra Flip Video camera with Flip’s codec 3vix. Flip is aware of this problem and acknowledged it last Friday. Flip says Apple is aware of the problem.
My MAC PowerPc G4 has performed well in the past two months when working with the Flip Video camera. So, at Flip Video’s suggestion I upgraded the operating system to OS 10.5 from OS 10.4.11. Flip Video says their camera works with OS 10.5. Once OS 10.5 was uploaded I soon discovered that iMovie 08 would not operate on my PowerPc G4, 1.86 MHz. The speed requirement for iMovie 08 is 1.9 GHz.
At this point of “spinning my wheels for nearly a month” with this Flip Video camera, I decided to purchase a new iMac. On May 2, 2008, I walked out of the Apple Store in Walnut Creek with the new iMac 20-inch: 2.66GHz. Now the Flip video camera should work and all my video problems solved. However, this was not to be.
When I attempted to Import Flip Video AVI and MOV files into iMovie 08 the files were “grayed out” and would not Import. None of my previous Flip Video files would Import. I tried making new Flip Video movies, they also would not Import into iMovie 08.
At another Apple Store, the tech suggested I download the previous version of iMovie HD. I did this and with hours of working through the different Export options I was able to create movies to post again on youTube. However, the picture quality of the newer iMovies has never approached the quality of my last post before QT 7.4.5 downloaded. Remember my problems started with QT 7.4.5. Well, my new iMac came with QT 7.4.1, I have not Uploaded QT 7.4.5 and won’t until Flip Video fixes this problem.
Examples of my Flip Video movies can be viewed on youTube at: sffoggydays. The last video with excellent picture quality was posted 6 Apr 2008 titled “A Day at the San Francisco Zoo, Chapter Nine, L-Taravel Ride to BART.” This video was made in iMovie and Exported before QT 7.4.5 downloaded. All the youTube Flip Videos made after 6 Apr 2008 have poor picture quality.
It is time for Flip Video camera to stop “passing the buck” to Apple. When manufactures of operating system such as Apple and Microsoft create newer and upgraded systems, it is the responsibility of the manufactures of applications to redo the programs for operating on the new systems. Here is where Flip Video is not accepting this responsibility to Mac users of their camera. The Flip Video application/codex/drivers need to be updated in order to fix the following problems:
- No sound on AVI files in QT 7.4.5
- No Import of AVI and MOV files in iMovie 08
- Poor picture quality for youTube in Export of iMovie HD
I like my Flip Video camera, want to continue making movies for youTube, and recommending the camera to others. The Flip Video camera people need to fix these problems for Mac users.
I am still making Flip Video of my grandkids.

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