All kinds of legitimate applications here.
I keep one in my car, "just in case". Living in Las Vegas, I have to deal with a lot of crappy (and uninsured!) drivers. With the camcorder, I can just hit record, do a walk-through of the damage, get a visual of where the involved cars were, and record faces, license plates, and oral statements. (Handy if they ever admit guilt and later deny it.. heheh)
Haven't needed to use it in this way yet (knocks on wood), but it's good to know I've got it there. I used to keep a disposable, but always worried that the film would be ruined by the heat. These camcorders are perfect.
Some people use 'em in model helicopters, rockets, and airplanes.. at $25, it's easy to use these as toys.