what camera you use depends on what you are going to do with your finshed film.
showing a film in a theater really needs 35mm film stock to look good. Or an HD camera
however, these days you can show your work (or parts of it) on youtube. or other web sites.
I know a guy that made a film with a handheld camera. Don't ask me which model because I wasn't there when he did it. But It was all digital. camera, editing, everything.
in terms of price that's the best way to go. I did much of the special effects for his film and he gave me files in the divx format. That way the quality did not degrade. I saved in the divx format so when the editor dropped the effects files in the edited footage it would match.
If you pay attention to details your work can look surprisingly good dispite the relativly low price of the equiptment. And digital cameras are sensative to light in a way that film cameras are not. Educate yourself about that before you start shooting with actors.
the good things about digital cameras of course is that there's no huge overhead on film stock. In fact I would spend lots of time making tests. Shooting in all sorts of lighting situations and making experiments. That way, once you get with the actors there are fewer surprises.
What matters is not the camera. and ok camera will do fine. What you need is a good script, a talented director and an experienced crew.
