The LifeCam (also known as the Cinema) can shoot in HD resolution with 720p (1280 x 720 at 30 frames per second). It can record video footage a little better than the average, run-of-the-mill webcams that you can get at your local Wal-Mart.
Of course, you will need a dual core 1.6GHz processor in order to get this thing to work, and that is just the minimum. Microsoft recommends 3GHz, as well as 2GB worth of memory. I just thought I would get all that fine print out of the way before I talked about all the other features.