funny you mention this, a friend who is a documentary maker down the road from me just bought a digital 8 Sony (looks like a HC1 in the back I swear), and I used it for the product shots and demo video for my SteadyGrip device this last weekend. I was shocked at how good of quality this thing put out. Noticably the latitude wasnt there, it blew out highlights, and there seemed to be a little more grain than usual but really the quality was pretty good, much better than I was expecting. But see thats because its basically recording mini-dv on a hi8 tape. hi8 and VHS however, are infinitely inferior to this. SuperVHS is above hi8 but I would only put the best SuperVHS on par with a $500 mini-dv.
Mini-DV is pretty much the defacto SD now, or DVCam. It really comes down to the quality of the optics (which have gotten better on video cameras over the years), the processing (which obviously has come a long way since 15 lbs cameras), the recording media (miniDV is nothing new but it is high quality), and the codec used if there is one (hence digital vs. analog). As in two cameras totally the same in every way except recording media and codec are going to be different even - DVCPro50 will be superiour to DV25 (Standard mini-dv).
So no you weren't imagining it, d8 can look pretty good.. and with firewire out it can act pretty good too. But then again for $100 more you can have a true minidv camera.