See this post on allthingsd.
I'm happy for the flip guys - I have bought one and the gf has been gifted two (including the one I bought). I think the camera was very innovative and they did a good job making and marketing them.
I also think that Cisco bought the wrong thing at the wrong time. My prediction is that the Flip brand (or whatever Cisco rebrands this as) gets wiped out over the next 3 years. The reasoning here is the following:
Flip at one point was the disruptor in the market - they marketed a device that did not do stills at all, or poorly and was not a competitor to entrenched still camera models like those made by canon or kodak.
Flip was not a very good camcorder either because it did not come with optical zoom, lots and lots of buttons that nobody but the real pros can figure out, and generally looked like it had poorer construction.
It had two things going for it: it did HD and it was cheap.
Classic innovator's dilemma here - a cheap disruptor that is unappealing to any but the lowest segment of the market. Moreover, this is a section of the market that the incumbents are more than happy to get rid of - they most likely are making tons of money selling medium to high end HD cameras and there really isn't a developed market for the Flip.
This is all good stuff for the Flip people. They survived, they did a good job and completely changed the landscape.
However, now we get to a point where the sustaining innovators are catching up - the still cameras which used to take mediocre (at best) video are now starting to do HD. And they're getting cheaper. The Flip may be the cheapest HD camera around, but not by much. This means that its market share will dwindle unless they can continue to disrupt the market - and its hard to see where. Moreover, Nikon and Canon and Kodak are the experts when it comes to making lenses and other things that people start to care about when the price point is the same. The Flip cannot compete with this and Cisco does not employ optics people.
The Flip guys did the right thing by flipping the company over. My prediction is that Cisco writes this off their books in 3 years.
** Of course, I have no data to back up any of the assertions I'm making, but you knew this already :)