If you are living in Japan (or willing to pay for the shipping) you can get your hands on what may be the smallest HD video camera that isn’t being used by various spy agencies. The Chobi Cam Pro, from Japan Trust Technologies, can pick up 720p video and sound, or take still photos at 4032 x 3024 (or about 12 megapixels). The whole thing is the size of a USB flash drive. It can dump the pictures and video to a USB connection or SD card. And yes, that picture is accurate.
Obviously the lens isn’t going to give the high-end performance of a “real” HD video camera, but the sample videos on the site look impressive. And assuming you are not surreptitiously spying on someone, this would certainly be a great pocket-able alternative to the point-and-shoot that most people use when picture quality isn’t as big an issue (but at 12 megapixels who is complaining?) And it hasn't got most of the features one would expect form a “real” camera. It prices at ¥5,980 (or about $76). To order you’ll have to navigate JTT’s site in Japanese.