It definitely does work much better with a good light level, but my old VHS-C (also Panasonic) has much better quality in low light.
I think Panasonic want you to buy the video flash attachment that fits on top (probably doubles the weight, eats the battery and costs as much as the cam)
As for the 1.2Mpixel pictures - you need to resize them by 50% to get good quality there, they are also quite dark. However it is still an extremely useful feature.
I've not had any problems with the PC connections USB/AV, but don't have the equipment to try the DV connection.
On the whole, I'm not too disatisfied - all my home video will just have to be sunny
Paul