The problem with a larger camera is you are pretty much saying "Hey, I'm recording here!" and questions may be asked about what you're doing this for, etc. By using a "normal" camera, you attract less attention to yourself, plus, speaking for myself, I go to WDW on MY vacation, if I capture something of interest, that's great. Going with a pro, or prosumer type camera would give me more to worry about.
But, no, covert isn't a requirement, but it's nice to be able to use smaller devices... and, something like that is overkill when 1/2 the members here are begging for iPod compatible videos. I usually go with DVD quality vids, and something like that would be overkill. Next trip will be my first with a HD camcorder, so we'll see what comes out of it.