The compression algorithms are lossier; reviews I've seen indicate that the difference is noticeable when viewed side-to-side with tape-based camcorders but not necessarily noticeable when viewed in isolation.
The best-reviewed HD camcorder I've seen is the Sony DCR-SR100.
One thing to take into account is the vastly improved editability and access times of material on the camcorder; the slight loss of perceived quality might be more than made up for by more actual use of it.