Quite right, unfortunately.
iLife'09 (currently at v8.0.6 I believe) almost certainly will import directly from your camera in the way you expect. (Can't be sure because I obviously haven't tested your gear 😀. But that's VERY commonly the case.)
However, to get it done cheaper, although still for about $20 of required software I'm afraid, please check out my reply (Nickname: gruvin) from earlier today in this thread:
http://discussions.apple.com/thread.jspa?threadID=2392314&tstart=0
... which explains how to use MPEG Streamclip to get the results you need. Briefly, you first convert your camera's video file to DV video format, then import those into iMoive'08.
(I am assuming you have a relatively modern camera, or camera/software combo that is producing MPEG-2 Multiplexed files with .MPG file extensions. That is the case for all but the strangest of hard drive and mini-DVD storage based cams.)
Good luck 😀