That's what I thought. I wasn't sure, but I'm glad you clarified shooting with an HD camera does make a difference in image quality (sharpness) even if the final product is in SD (via DVD or YouTube or whatever).
My situation is this: I have a consumer level Sony DVD cam now. I film live events such as concerts and kid's birthday parties and such. I want to save for a better quality camera with manual focus, a good optical zoom, mic/audio input, headphone/audio output, and timecode capabilities. No consumer level cam that I have looked at has timecode capabilites, so I am forced to look into getting a prosumer or pro-level cam. It will obviously be a lot easier and quicker to meet a goal of saving a couple thousand dollars to get a Canon GL2 (which I have heard nothing but good things about) than it would be to save up the $6000+ for a low-end Panasonic, Sony, or Canon HD setup (which I have heard a lot of complaints and concerns about). I really need two cameras and three would be ideal so keep in mind whatever price I'll be spending on a camera will be doubled or tripled.
While I don't want to buy two or three SD cams for a couple thousand a piece only to replace them a couple years down the road, anything would be better than what I have now, and I believe if I upgrade my equipment (cameras, audio interface, and computer), I'll be able to charge more for better quality and get more clients.
Besides, keeping in mind I need two or three cameras, it might take me two years to save enough to get HD Cams. In that time I could have been working with SD cams and making money and gaining more experience and clients which may in turn allow me to still get HD cams in 2 years, but have been working in the meantime as well.
Still think buying SD in my case is not a good idea?