I really like this new version of the vado HD. It is significantly smaller than the previous version, and in my opinion looks much nicer. The reason I have given it 4 stars rather than 5 is purely because of two minor annoyances. One is that capacity has dropped to 4GB from 8GB, and secondly that the lens angle is slighty (very slightly) less wide.
Both of those I can forgive, as I never actually got anywhere near 4GB when I used the previous gen vado (1st gen). To my mind this captures slightly more detail, which would make it worth it alone. I love the smaller size, it makes it even more convenient to use. The buttons I like as well, no old fashioned pushing! More like the controls on the PS3, simply place your finger on them and they respond.
The other thing I love, which is the same as previous versions, is how the software runs from the device. So I can use the vado central editing stuff wherever I go, without having to install it on a pc (it works on both macs and pcs).
Having used this for a few weeks now I can confirm that video quality seems much improved. Am very impressed with the quality, and it wasn't like I was unhappy with the first gen version I had before this. Also the battery seems to last longer, although I suspected that my last one was particularly bad. Have found the camera button very useful, so long as there is good light - as there is no flash.