recently bought a 3CCD camcorder. But was surprised the camera only saves in mpeg 2 and not in avi as my older previous single CCD camera.
On this camcorder Mpeg 2 size at top quality setting records at about 73MB per minute, but avi works out at 3 times that and pic quality does seem better, which is important for editing and saving to different format later like DivX.
So is the mpeg2 file being much smaller size inferior to .avi and would I be better off looking for camera that saves in avi?

Or perhaps go all the way and purchase a HighDefinition camera?

A video file size always depends on the used resolution and bitrate.
Divx and xvid are good and wide spread compression technologies and formats.

I'm assuming that you have a camcorder that has a hard drive on it. If that is the case then the mpeg video is ok but not great. Divx and Xvid are just other forms of avi. Same as mpeg 1 2 and 4, just different forms of mpeg video. So if you can find a camcorder that does any form of avi, divx or xvid then you would be better off considering that all three are better at compressing and keeping quality than mpeg.