Originally posted by jct us101 No it is true that the lens based IS is better in principle. When the sensor is moving around, that doesn't account for anything except for the movement in the sensor. A lot of the movement that causes blurred photos (hence the extra stops that are mentioned in lens based IS) takes place in the lens, as most of the time it is comparable in size and weight to the camera body. The gyrodes in the lens based IS can help to compensate for that movement, but not movement in the sensor, which is still about a stop or two more than the sensor based IS though.
Falconeye has stated in another thread that while these two may be currently roughly equal (edge to the lens based IS), sensor based IS has a lot more potential for improvement, because it can correct in more directions and the sensor is smaller -- easier to move.
I can shoot at 300 mm and 1/8 second pretty consistently with sensor based IS. That is about 5 stops on the K7. Hard to believe that I would get much more with lens based IS. The one thing that I miss about lens based IS is a stabilized viewfinder.
To the OP's point. I agree. IS in the lens adds a lot of size to your system as well as extra cost, but frankly, even if you are 7 feet tall and a gazillionaire, IS stabilized primes are not widely available. Shooting a 50 f1.4 is not possible with SR, except with camera body based IS and it does make a difference.