I started off using the free video editing software that came with my PC and Camstudio and a $10 microphone. Later, as my skills improved I invested in Camtasia (approximately $300) which is considered the gold standard for screencasting and a decent USB microphone. Other PC users have told me they use SnagIt ($40) which captures screen and audio and an entry level video editing programs like Adobe Preimere Elements or Sony Vegas which retail for approximately $100. Many people who work on the MAC platform use Snapz for screen capture and pull it into Final Cut Pro for editing. A new MAC tool called "IshowU" is gaining popularity.
We use Camstudio at our shop. However we found that we could NOT use youTube
or any of the other hosted services and keep the screen resolution
acceptable. And it gets old really fast to look at fuzzy screens
zooming in and out. So our videos are a combination of video and flash
and are self hosted.