Good question! I would be curious as well. I have a camera with horrible sound on it so that is a huge reason why I refuse to put videos of myself playing flute up on youtube. I can't figure out all that stuff anyway.

We just bought a RCA Small wonder.` A lot like a Flip video. It doesn't have very good musical recording quality. No better than a still digital with vid capability. It is fun for making YouTube-like vids though.

I think that if one were going to have better sound, either a dedicated, digital vid camera such as a Casio EX-V8 which is about $300.list $240 retail.
Or you simply add your prerecorded sound file to some vid. via some movie maker program.

My opinion is that the microphone is the most important link in the recording chain. An external, reasonably good mike should much improve the quality of the sound, if placed correctly.

There are lots of brands and models, among them my Yamaha YM70S dynamic microphone which is fairly cheap. (about 20 Eu).

You will also need a suitable support, high enough if you play standing and lower if you play seating. You could improvise one (short of buying one at music shops) with the lower part of a music stand and some minor modifications to keep the mike in place.

Some experimenting will be necessary concerning the best place for the microphone, so that it does not capture too many undesirable sounds as breathing and key noise.

The acoustics of the room (or hall...) is also very important; you must experiment because too much reverberation could be nice for our ears, but not too good for recording.

For the best sound possible you should make a separate sound recording of the playing, using either a good digital minidisk or fully solid state recorder or just a PC equipped with suitable recording software (I suggest Audacity, it's free and good).

Then it would be simple matter to make a video recording of your playing (without sound), while you listen to your own previous recording (similar to TV playbacks)for correct synchronization. Finally both parts are put together with movie maker or other video editing SW.

This method has the added advantage that you can make your video completely free from camera position concerns; if the person who operates the camera has some experience and creativity, you could end up with a beautiful and inspiring recording of your playing, with different views, close ups and so on.

This cannot be done if you use the built-in microphone of your camera as moving it around the player would cause sound changes that could impair the recording. Also consider that someone moving around you while you play could be quite distracting so you must concentrate and forget the camera.

<Added>

The quality of youtube videos is quite low so that you could use *any* camera for that. But sound can be very good, so my suggestions above do apply also for Youtube videos.

i actually use a canon powershot a550 camera which has video recording capabilitys, it has good quality sould (i will add a couple more vids to my profile and youtube so you can here) and 7.1 mega pixels with a fantastic lens, but any of the new A series(-50+) (the dash it the hundred series and that number just relats to the number of mega pixels ect. just make sure it has a 50+ and it is quarantied to be like mine) powershot cameras would be a bit like mine and have the same sound capablitys (just differant lenses as it is a camera first) or you can get canon camcorders which are meant to be good, but i have not used them.

my canon a550 cost my perants 130pounds in may last year so you are looking at probally 150 us dollars now (as canon have released other cameras i think)

that actually doesn't sound too bad, some of these new video cams have decent mics. But, that said, to properly record any flute, I agree with Jose, it is all in the mic, I have been in the studio a lot lately, and the mics these studios have, good studios that is, are pretty awesome, you have to barely play and they just boom...

not to mention the fact that they bring out the full range of the flute...

Here are a recording I made today. I use an ADK 51 microphone (150$), an ART Tube MP Studio preamp (150$), Line6 UX2, Audio interface (250$). The reverb is an free impulse reverb called SIR. As for my playing I'm an 43 years old amateur, and I hope my playing dont spoil the listening :-) (You need good speakers or headphones to get the most out of it.)

I think it's fantastic what sound quality you can get now for relativly small money.

Here are small fragments of different music.

http://jonasberglund.webng.com/ShortFluteParts.mp3

Best regards Jonte

Hi Jonte! I recall talking here with you about the wonderful ADK51 and the rest of your equipment some months ago.

Congratulations for the playing and the recordings.

Time goes quickly when your playing flute, I think it was nearly a year ago

/Jonte