That is the cheapest video camera you could ever get!  It's exactly the same in concept as a disposable 35mm film camera and might be exactly the same as the disposable video cameras I've seen - you might be able to go to a CVS store and see a video camera just like it that they sell as a disposable video camera - with the CVS cams you're supposed to return them to the store and pay another $20 or $30 (on top of what you paid when you 'bought' the camera) to get your video that you shot put onto a DVD and then they will erase the data on the camera and resell it.  The CVS cams have a proprietary connection on them which is supposed to stop anyone but the CVS employees that have the special connector from getting the video off of it ;)

I actually got ahold of one of those CVS disp video cameras about a year ago and I can show you what the quality looks like.  It's not terrible, but for a camera you'd spend (I think) $10 for it's awesome.  I'd call it webcam quality video but video from any camera is going to be grainy when there isn't enough light for the imaging chip to see well - in case when I say 'webcam' you think 'grainy' :)
http://hosting.dfbutclan.com/members/0skillz/CVScam/
The small file was taken from inside my car at a stop light and is only 7 seconds long.  The bigger file was taken as I walked from my car to where I used to work at about 7:15 AM last August.  Any camera will take better pics if it's outside in sunlight.  Those videos use the Xvid video codec - just in case you can't play them that codec might be what you're missing.  I can't rember exactly but I think I was able to get 1 to 3 minutes of video from the disposable cam in decent to high quality settings.  I have no idea if that would be the same as the RCA but I was also able to get 12 min at lower quality that I was happy with... I just turned on my cam to see how much record time was on it - haven't used it in a year but I'm sure I was happy with the settings I left it at and it tells me 12 min of rec time.

At any rate... I'm going to bet that RCA camera's video would look alot lot what I have in those .avi files.  That little camera will probably great and nearly indestructable too if that matters at all.  If I ever wanted to put a camera on a motorcycle or the outside of a car that was going to be driving at high speeds and I didn't need super-awesome looking HD video I'd use one of these little cams for sure.  I used to have pictures of what all I did to my disposable CVS camera... taking it apart and making the custom connector and all so I could get the video off of it myself.  I even painted it black - don't like the grey colored plastic much :)

I am so out of the loop when it comes to current more traditional camcorders from the big names like Panasonic, JVC and Sony...  I know there's alot of cool stuff out there but probably nothing much at the dirt-cheap end of the price range.  I think every company that makes camcorders has a few models today that record right to a hard disk instead of a DVD or tape - love that idea but I don't know off-hand where prices start for those.  I'd bet $500+ and that's really far away from what this little RCA you showed me is :)  I'd reccomend the RCA knowing what I think it is but only because it's easy to use, very durable and easy to carry around.