It's worth noting that when you keep the playback image small on your computer--such as YouTube size--it's harder to notice the difference in the video quality among these models, particularly when it comes to sharpness and noise. But when you blow the video up to full screen (or view it on a large-screen TV) you start to see the differences. Though you can't compare this HD video to the video you'd capture with a full-fledged HD camcorder, shooting in 720p does allow you to scale the image to larger sizes and retain a reasonable amount of detail and sharpness than with VGA-resolution video.
As for the audio, it's louder than the original Vado HD. For best results you do have to stand fairly close to your subject and not have too much extraneous noise, but it does record and play back with ample volume and relatively clearly. Like the Zi8, this model supports an optional external stereo mic via the headphone jack, which allows for enhanced recording capabilities.
To get stable video with this type of camcorder, it really helps to use a tripod; normal handheld jitter is almost inescapable. Like many of its competitors, the camcorder doesn't focus at close distances; we wish there was a macro mode like the one offered on the Kodak Zi8.
One of the Flip's key advantages has been how easy it is to get videos off the camera and distribute them, and Creative has put a bit more effort into this aspect of the user experience. Vado Central 3.0 software comes preloaded in the camcorder and can run under both Windows and OS X (10.4 or later). Unlike competitors, however, you can't run the software unless the device is attached to the system, and you can only install it to your hard drive under OS X. Creative says it works this way because its users prefer third-party software, but it still seems unnecessary to cripple the software like this and likely tick off some people. Unlike with previous models, at least compatibility doesn't seem to be an issue: the MP4 files play fine using QuickTime and Adobe Premiere Elements.
The software allows for one-touch uploads to YouTube, Photobucket, Box.net, Facebook, KinKast, and MotionBox (plus Twitter on the Mac), once you've stored your username and password for each service. You can also e-mail clips to friends and family. Beyond the sharing capabilities, you really don't get much else. It provides only the basic capability to trim clips, as well as extract a single photo or 30 photos. You can't stitch them together into a longer movie, though. On the Mac, it can hand off editing to iMovie via a dedicated link in the software. Creative has slightly improved its sharing features, but Flip Video remains the leader in this area, with its online Flip Channels and an iPhone app that allows you or your friends and family to access those videos remotely from an iPhone or iPod Touch.
In the end, though the Creative Vado HD 3rd Gen doesn't successfully distinguish itself from the competition--particularly the Kodak Zi8--it does offer some nice improvements over earlier Vado HD models that keep it relevant in the pocket camcorder space. Ideally, however, we'd like to see this model discounted to less than $150. At that price, it might become more tempting.