What camcorder would you recommend for semi-pro video shooting. Would like one for the best internet video and hi-quality dvd.
Also, if camcorder has option for digital stills is that worth it, or just have a digital camera on hand.
Budget is about $1200 for camera and accessories.
Anything will do, we even use an old camera(not digital) in our video shoot. search in galivio in youtube.com. You could see our work there. But the problem was, we have to convert the tape to vcd or dvd format. 
The Sony HDR-HC3 is a really good place to start. It's HDV(optional) and has very good low-light footage. It fits in your palm, and I think it's in your price range.
About stills on a camcorder, if the camera sends the images to a memory stick of some kind, I like it. Good way of getting screenshots from your film quickly, without having to edit it first.
If you are going to produce DVD quality I highly recommend getting a camera that supports mic line-in. It is highly desirable. I have done DVD editing with everything from analog 8mm to Mini-DV, and the quality is mostly reflected in the quality of camera and tapes, not the media or the analog vs digital. I recommend the Panasonic brand for in-expensive line-in Mini-DV camcorders. For internet video I would grab a small $100 digital video camera such as the DigiView from Wal-Mart.
Do yourself a favor and get a 3 chip camera. I'd go for a DV camera, although you could get an HDV if you wanted. I wouldn't spend the extra money for HDV since you can't distribute HDV content to people really, but you can burn a DVD for pretty much anyone. By the time the come out with burners for either Blu-Ray or HD-DVDs on computers, the newere HD cams will be even better and cheaper and that's what I'm waiting for as I need to have an end to end studio for my business.
The other things you should look for is...
Manual Control over: iris, focus, gain, white balance, audio levels, shutter speed.
External mic jack (preferably XLR)
Headphone jack
You could probably find a used Sony VX 2000 or 2100 or maybe even a PD-150 in your price range. Or you could go with something like a Cannon GL-2. There's a lot of cams you could get but try to get as many of the things I mentioned as possible.
Panasonic NV-GS180 or in USA PV-GS180 is a great camera with 3 CCD and cost about 500$! It is really a great camera! And very affordable!! 
Of course there are much better cameras, but they often cost much more! Well, if you increase your budget $2-300, then pick up a Sony HD Handycam with built in 40 gig hard drive.. GREAT quality. Not bad in pricing. FIts in your hand nicely. I want one now..
If you can afford it, I would recommend a Sony HVR-Z1.
It's got a great feel to it, is comfortable to use, and can record NTSC as well as PAL images.
Furthermore, you can choose to record in three different modes: HDV, DVCam, or DV SP. I like that it has a big LCD screen which flips open and XLR audio inputs for pro audio recording.
If there is a downside, it probably is that it consumes battery power more than the other generations of camcorders.
I've been using this for the whole of last year and I've got no regrets.
Some camera info can be found here:
http://digitalvideolessons.com/Digital%20Video%20Lessons/Selecting%20Camera.html
