A. Depends up on what You compare with. Reg iMovie Compared to nothing - Yes it works "well"
B. Stabilization and People are two different functions - totally
• Stabilization - tries to do a Digital stabilization by zooming in a bit and trying to follow the jumping picture in a more acceptable way - COST - it zooms in = Loss of sharpness is un-avoidable
• People - is a function to select clips with People or Not - NOT AS IN iPhoto - and Not any sort of stabilization AT ALL
There are other approaches
• fx-Stabilizer for iMovie HD6
• Motion™ - if I understands this program right
• FinalCut Pro 6 and 7 - and
• FinalCut Pro-X (a very different product compared to above)
Yours Bengt W
These work well, and the good news is they are non-destructive to your clips. When you select these options, iMovie performs analysis, but does not change the underlying clips. So in your projects, you can decide whether to apply the stabilization or not. If it helps, use it. If it doesn't don't. It just takes a little longer during import to do the analysis.
Stabilization works best when the zoom is at 5% or less. If your footage is so shaky that imovie would have to zoom to 25% or 50% to stabilize it, then it will not help you.
As always, the best stabilization is to use a tripod, but sometimes the best footage cannot be captured on a tripod.
I would also say that stabilization is less effective with standard def DV because you don't have many pixels to work with. You will get better results with stabilization if you have 1920x1080 footage, because you can lose 5% of pixels and still have plenty.
My best advice is to try it with your particular footage.