I had been searching google to find out how to do this same thing and was surprised to find out you used to need special software (shareware) to do this.
However, that's no longer the case. When I plug in my Iphone, a box pops up in Win7 offering the option to transfer photos and videos from my iphone, so I clicked it and they are now on my PC under Computer>Mike's iphone>internal storage>DCIM>(some extra folder labled 800AAAAA), and there I see my photos and videos taken with the iphone camera. From there just drag them to Windows Video folder (or where ever) and enjoy.
My only question is, what got into Apple making itunes a one-way transfer program, yet it can backup and save your iphone data? What did they have against saving home made videos to your computer that made people have to spend money on third party shareware to do it, when it could have been a selling feature for itunes/iphone.
You would think Steve would love to show off something like that when introducing each year's new model iphone at their conferences. "Yes my friends, itunes makes it so easy that even your Grandmother can make videos with her iphone and save them on her computer with one click of the sync button."