We went through the same process as you - Hi8 to ?. We chose the miniDVD and love it.
Yes, the mini DVDs can play directly to your player or, like us, you can combine mini DVDs, add menus, add music, and write to a standard DVD. We combine ours but it is nice to have instant and permanent originals (minis). We looked at the hard drive camcorders but decided against it. We didn't want to take a chance of a computer glitch losing our treasured memories before we could load the files to DVD or computer.
We have a Canon DC40 and it is very small. Next week will be our first trip to DW with the camera. Previous times we had the bulky hi8. We did take the DC40 on a 10 day cruise last year and it was wonderful. It has widescreen format for the newer TVs and can take 7mp photos AS it records video.
The only downside is the 30 minute recording time of a mini DVD. But, just have extra pre-formatted disks with you. If we have 8 minutes left on a disk but want to record Wishes at 14 minutes, we just put in a new disk for Wishes and put the old disk back in when finished. Each segment is a different file and when we make our large DVD, we just rearrange the segments back in order. This sounds like a lot of work but is very easy. Besides, we don't run into this situation very often. Most segments are relatively small. I hope this helps.