Yes, except the blur effect of electronic stabilization is not as dramatic as the negative effect from a digital zoom.
I would actually suggest you keep the image stabilization on no matter what, unless you deliberately want to achieve a very jerky camera effect. The increased random motion in the video with stabilization disabled takes a lot more storage data in order to achieve an equivalent image quality compared to a calmer, less jittery video. The bitrate is fixed, however, so instead it will result in overall reduced image quality as the file data is used to compensate for motion instead of texture detailing. This is due to the more modern, higher compression codecs used in HD camcorders (both HDV and AVCHD). Of course, I have not used your camera model, so test this hypothesis with the video quality set to the bitrate you want to use, with stabilization on and then off. If the bitrate is high enough it may more than compensate for the motion and, with stabilization disabled, you will have a very slightly sharper image.
Note that this recommendation does not apply to standard definition camcorders using the DV codec, since each frame is compressed separately without concern for motion.