If I want to create loops what video camera would be best

Hi will not recommend any particular make but you will need a HD camcorder/video camera which at minimum supports HD 720 or depending on budget one that supports 1080, Sony have just released a 1080i camcorder that is real cool and is aprox £1000.
Again there are lots of progs to edit video and compress the final output some freeware but most of the better ones cost money, I use adobe premier along with several other progs to create my dream loops and have found from experience that mpg encoding is less cpu intensive than WMV although the software to edit and encode in WMV is available within Vista although it does leave a lot to be desired compared to the dedicated rendering/editing programs it does produce acceptable results.
I am lucky in as much as this is what I do at work for a living and so have access to the software that otherwise would prob make my credit card gasp   

Hope this is of some help.

00NukE

Another recommendation would be this - although what nuke said is true
it's very pricey both cam and adobe premier and it's not for a beginner
that software takes much time to master ........

This is my choice for a beginner :

Go with Sony for a camcorder the best one your budget will allow , that's what i use.

and for Great Video software starting out >>>> Vegas Movie Studio + DVD ( HD Version )
it's only $130 bucks American and is very user friendly to get started and you
will probably need nothing else ,,,, I too use this program .... and add any nice
photo editing program to the package you want to mess with stills ....something you
can handle at your speed ...........

Now with that said - those are the tools you'll need to create the dream , but the
Ideas got to come from you , that ya can't buy , you must be a very creative person
to do these kind of work ..... unless to just want to render straight video
as your dream and not really create anything .... just copy and paste video loops ..

anyway hope this helps ya some