1. Many of today's DVCs allow users to take digital stills and shoot low quality Mpeg 1 videos to be stored in a memorycard. So the answer of your question 1. is it depends on the size of memorycard you use as well as the resolution you want for the digital stills. Say if you got a 64MB card and you set the resolution of each picture to 640x480 (ie. about 120KB in file size each), then you can store more than 500 stills.
2. Beside Mpeg-1 format that I mentioned above, most DVCs mainly record videos on DV format (using mini-DV tape cassettes). Some of the latest Sony DVCs that use micro-cassettes record videos on Mpeg 2 format.
3. The best format is DV format because it gives a picture quality which surpasses that of DVD/Mpeg 2 format
I'm not if I answered your questions right. Do feel free to ask more questions.
1. Well, basically yes. But I know some Sony DV camcorders allow you to record stills on the cassette as well. Confusing, right? Anyway the picture quality of the stills on cassette is poor, and hence you can just ignore this feature.
2. You can't record video to a mini-DV cassette on Mpeg formats (again some Sonys allow you to shoot mpeg 1 videos on cassette; just ignore this if you find it confusing). Instead it uses DV format which has a better picture quality and lower compression than those of Mpeg 2 format. DV is recorded at 1:1 time ratio. So a 60-minute cassette will allow you to record up to 60 minutes of video in SP mode (90 minutes in LP mode).