with weddings etc, you'll need a camera capable of shooting well in low light. the DV4000 by JVC has a f1.2 lens which allows more light in than say a 1.6 or a 1.8 lens, this camera is generally about £600. i've owned a jvc in the past and whilst i was happy with the camera, i wasn't impressed with the deck itself, and within 18months needed to be repaired twice. i've now moved onto a much more expensive semi-pro sony model, and find the build quality is way better, but it has a higher f rating and therefore wont handle itself as well in low light as the dv4000.
if you want to do weddings in order to make money, then you'll need to spend more money on more professional level equipment (such as a sony vx2000 or a xl1s) and you'll need multiple camera men in order to make sure its flawless and cover all the angles. if its just a one-off personal thing, then a sub £1000 camera should be fine, just test the environment with the camera before the big day, and learn how to setup the manual modes (white balance, exposure etc) before hand.
as for the picture quality... depends from camera to camera, but its improved leaps and bounds since hi8 (mainly outdoors tho, as hi8 still seems preferable indoors under certain lighting conditions!) and you'll get a nice sharp image with accurate colours if you set the camera up properly. it truly is a case of "you get what you pay for". the sony cameras are generally more expensive than their counterparts, but thats the same with sony's entire range of electronics. but they're reliable, and i know people who shoot on nothing else. i've seen sony rigs that cost $30,000 so they cover a VERY large range of uses
personally i'd NEVER shoot in onboard 16x9, its artificial when done on the camera and you'll lose quality for doing so. if the camera you buy allows it, fit a wide angle lens instead and shoot in 4:3.
the best thing to do is simply look up reviews, either here or camcorderinfo.com camuser.co.uk or just using google by typing in the model name and review (for example "VX2000 Review" and wading thru the junk)
buying a camera that allows ext.microphone inputs etc also gives you a wider range of uses, as you can then fit a zoom mic, or a shotgun mic depending on your needs. my old jvc didn't allow an ext.mic (like a lot of the jvc range, but the dv4000 does include a socket now) and that was one of the few things that irked me. however its inbuilt mic was very good, and i could film infront of a 10k soundrig without distortions. my new 3ccd sony mic his great quality, but simply can't surpress the audio and will distort when the audio is simply too loud.
ive only got experiences with 2 cameras, a jvc dvl357 (£500 paid last year) and a sony trv950 (£1300 cost last week) so i can't really offer you advice on other models, but hopefully some of what i've typed will be of some use to you.