So how does it work? In our initial and very quick try, not so badly -- but at the same time, really not so great. Prepare for a slow frame rate (tested on 3G and on a 3GS) with just okay audio. For $0.99, there's not much value there, especially considering you can't do anything with the videos you capture except watch them on your phone until you delete them (although they are backed up with your sandbox data, they are inaccessible except to iPhone geeks).
The GUI is flimsy as well. For example, you actually have to reach under a toolbar to swipe-to-delete the most recent recording. While the entire application feels a bit like a rush job, you've got to admit that it's nice to have approved access to App Store video recording without jailbreak on older equipment -- but for now, you'd be better off with the Ustream app and the ability to save your videos to a destination.
For jailbroken phones, I personally love Cydia's Cycorder app -- it has recorded many school plays and concerts. Camcorder provides a bit of the same functionality (albeit at a slightly lower quality) without having to go the jailbreak route. That's a good thing... and it will be a better thing when/if the app adds some export functionality.
This app works by using the long-blacklisted UIGetScreenImage() function that I've written about in the past. (I discovered this use by scanning the application using my APIkit scanner.) Apple must have willingly given the go-ahead for its use, as their automated scanning must have picked the same function call. Good news on the "more flexible review" front. Since Apple recently gave the green light to the UStream video app, with Qik hot on its heels, it's likely we'll see more of these applications that provide iPhone video functionality for livecasting or recording from your device.
So how much is Apple loosening up? It's hard to tell, despite the buzz surrounding recent "non-rejection" letters, where developers are warned about API use at the same time their applications are given the go ahead for App Store. I may just go ahead and resubmit my AppFlow application launcher that Apple rejected ages ago, which is full of unauthorized APIs from one end to the other. Maybe its time has come.
Update: TUAW reader Josh points to the $0.99 iVideoCamera [iTunes link] also new on App Store (December 12), that does let you save to your camera roll.