Two algorithmic image stabilization solution were presentaed on recent SIGGRAPH'06 in Boston.
The first one comes from MIT and Toronto University people:
http://people.csail.mit.edu/fergus/research/deblur.html
Another one is flattered-shutter technique form Mitsubishi and Northwestern University:
http://www.cfar.umd.edu/~aagrawal/sig06/sig06.html
http://www.merl.com/people/raskar/deblur/
DigitalCameraInfo reports that the two techniques will be combiled in future.
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