Hi Bob,
Image Stabilization (IS) works on all camera settings including video (i.e. if the switch mounted on the lens is turned to the "ON" position).
As you may know by now, Canon DSLR cameras use lens based image stabilization method. Some kits come with image stabilized lenses and some don't. If you see a Canon lens with "IS" designation imprinted on its body, that lens is an Image Stabilized unit.
Almost all IS lenses comes with an on/off switch and if you are using a tripod or other non-moving platform, you could turn off image stabilization. It is a personal preference when and where to use the IS. An example would be, if you are using the camera in a vehicle in motion, IS mechanism would dampen most vibrations. Please note that IS would not eliminate all camera movement and you need to get used to each lens's comfort zone (so to speak).
While the newest lenses can have the IS left on for shooting stills, for video it can introduce a movement to the image that is undesirable. Some professionals prefer not to use the IS function for video due to this reason.
Here is a link with an example:
http://www.vimeo.com/5274867
Neil
"Always remember that you're unique. Just like everyone else".
Confucius
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