I bought my Digital Rebel before I got the S1, so the S1 was my first digicam with a movie mode. I am very impressed with the video quality, especially outdoors. Inside in low light it's not quite as good, but still very acceptable. It is cool to be able to zoom while recording. I haven't played anything back through a TV yet, but playback on my computer the clips look great to my eyes. The Image Stabilization is also a great feature.
I usually record in the 640x480 30fps mode, but it swallows a 1 GB card in about 2 minutes. Them I use Windows Media Encoder to reduce the file size into "email-able" chunks. My parents love this, as they can watch how much of a mess my 1 year old made at dinner on the same evening.
Summary: Great camera. The S2 adds a few more features, such as 5 Mpixel and stereo microphone, but for the price Dell is selling it today(check out your favorite deals site), I'd buy another!