How do you produce product demo videos?
satyajit: Are you looking for screencasts or videos of desktop apps of sort? I am not sure what people use for screencast softwares, but the Railscasts guys seem to be creating some neat looking ones. You might want to ask them.
I know the LearningRails.com guys personally, and they do a great screencast too. There is a free HYperCam for Windows, but result is not all that impressive. Adobe has something called Captivate, which will let you create some FLV/F4Vs I believe.