I've done a few of those videos for clients, and yes they pay off! The only real downside to me was the server space they take up and the time to upload, but my out of town clients really enjoy them....
Personally, I use a JVC HD handheld DVD recorder. It seems to do the trick.... As far as software for editing, I have used cyberlink (I think it came bundled with the camera).
On my pc, as I said, I use Cyberlink, it came bundled with the camera. Fairly easy to use and I think it does a fine job for splicing movies and adding title frames before a scene.
On my mac I use Adobe premier, pretty expensive, but has all the bells and whistles, 80% of which I don't use (or know how...it is learn as you go for me)