Is there an image or sound quality difference between
tapes and dvds?
Yes.
DV tape is much better quality, and it's what iMovie is designed to use. To illustrate, look at the file size of DV footage vs. DVD. An iMovie project takes about 13GB per hour of tape when you import. When you burn it to DVD it is compressed to under 4.7GB. That compression is optimized for viewing on a TV screen. (People often complain that their DVDs look bad on their computer monitors, and they do. Monitors have much higher resolution than TV screens.) DVD is meant for being the final version.
Now consider DVD camcorder vs. miniDV camcorder. (You can search this forum and find many relevant threads. Karsten Schluter, #1 member of this forum, often tells people to return their DVD camcorders. He also explains better than I do, so if you're interested you can look for him in your search.) When you convert the footage from the DVD camcorder, you are trying to decompress the small mpeg file into a dv stream. Yes, you can get it into iMovie, but since your source file is so much smaller, you will notice a loss in quality.
So your choice really depends on how you will primarily use the camcorder. If you like the convenience of finalizing the disc in the camcorder and having something that you can instantly view, then the DVD camcorder may be best for you. But if you plan to do editing with iMovie and iDVD, you're better off having the higher quality DV tape for your source footage.
Where has Karsten been this week, anyway?