It lacks a rear camera, so you're stuck with the 1.3MP shooter on the front. You're also stuck with only the ability to shoot VGA video at 640x480... or are you? Apparently, there is a very simple hack that can mod your Nexus 7, effectively giving you the ability to use that little camera to record HD 720p video. Yes, because it's front-facing, you probably won't be able to see what you're shooting, but at least it works.
Check out the two sample videos below to compare pretty much the same shot at 640x480 and at 1280x720. More information about how to do this hack can be found in the XDA-Dev thread started by "hillbeast."