We got a Flip as a wedding gift and love it. Our friends even had our logo put on it, you can put your own pic or pattern to personalize it. We take short clips of our friends playing sports and of our neice and nephew. I really like it becuase you don't have to have a cord to upload or even charge (as long as you have a computer nearby). I actually bought a mac for the ease of editing videos, but it works on our PC as well. We send them to the grandparents, upload to facebook and picasa so I know they get shared and watched a couple of times. Also we have an AppleTV that plays our itunes on our big screen so we show those kinds of videos and stuff when we have people over to the house.
As for camera and video, I like having both because DH will take pics and I can video at the same time. The Flip is small enough to fit in your pocket so you can take it almost anywhere. And for us we have a point and shoot camera for the crazy times and a Nikon D60 for the important pics. Does your frined already have a nice camera? If so, then the Flip is the way to go. If not, maybe check out the smaller cameras that also offer video.
I feel like I just rambled on for 10 minutes. Let me know if you have any questions.