When you say "best" quality for around $1000 or less, here goes...
The Canon HV20 is a HD camcorder that is raved about online. Everone who uses one likes it. High Def, 16:9 wide format recording, *extremely* sharp images, and records using the same compression and frame rate that cinema film does. Many amateur film makers actually use this camcorder to do movies (like Sundance, etc). Yes, it uses miniDV tapes, but it needs to in order to get the best quality. Hard drive, DVD, and memory card camcorders use a different type of compression to record to their media, degrading image quality. DV tapes offer the best quality, and I've seen sample videos from this camcorder and can say it's takes MUCH more detailed video than any other consumer camcorder out there. This camcorder also takes good 3 megapixel still images, too.
This camcorder is $949 or so at Circuit City or Best Buy, but B&H in New York (super large store) sells it for around $749 currently. Link to it: http://www.bhphotovideo.com/c/produc..._CMOS_HDV.html
As far as cameras, Costco has the Nikon D40x digital SLR with two lens kit for around $849. 10 megapixel camera. This particular model is made to be consumer friendlier than other DSLRs, and is easy to use. The Costco kit also comes with two training DVDs. Digital SLRs offer far better image quality than point-and-shoot models, and much better low-light and indoor image quality, plus their response time is much faster as well. If you don't need to do "poster sized" prints on a regular basis, you can get the 6 megapixel version of this camera (the D40 - no "x" in the model) for less.
Link for it (long link, but hopefully it'll work, otherwise go to costco.com): http://www.costco.com/Browse/Product.aspx?Prodid=11238544&whse=BC&Ne=4000000&eC at=BC|79|83|2932&N=4001473&Mo=14&pos=6&No=1&Nr=P_C atalogName:BC&cat=2932&Ns=P_Price|1||P_SignDesc1&l ang=en-US&Sp=C&ec=BC-EC10604-Cat83&topnav= **** if this one is too long, try this link: http://tinyurl.com/3x8fjw (broken link)
Even if you don't belong to Costo, the D40x deal is out there in some stores. Just make sure if you buy it you get the updated kit that has the "VR" version of the zoom lens. VR standing for image stabilization. The older kits have the non-VR version of the lens and are still being sold.