Our camcorder caused family tension as DH was for ever stopping (without warning) to film stuff. Our two teenagers didn't want to be filmed at all, which caused more problems. DH began to feel he was having a holiday through a view finder rather than experiencing it first hand.
In the end we came to a compromise and just took it out on some days and left it firmly locked in the safe on the others.
For us it's definitely yes, but then again, we're event filmmakers so it's hard to leave our job at home. This year we did buy a new camera, Panasonic Lumix GH1, which is a stills and video camera in one, professional HD video quality. Saved us carrying photo and video equipment about.
Think about it this way: if you were to find a film of your great-grandparents first vacation together and a photo album of that vacation, but can only see one, which one would you choose? Your answer will answer your own question about taking a video camera or just a stills camera.
We have a Flip Mino HD and for us it is great as it is the size of a mobile phone and you can record 2 hours worth of footage before you need to download to a PC. Much better than the camcorder we have used in the past.