There was a time when I would have agreed with this, but not now. A long time ago I read an interview with Danny Boyle defending his decision to film with a DV camera (I don't have a link to it but honestly I probably found it on this board somewhere). He said something to the effect of "it's ugly and it's beautiful". I have to agree with that now. The dated quality makes it almost spookier in a way. I think genuinely old-looking footage has an inherently creepy quality to it, and this movie used it perfectly. It reminds me of mysterious, grainy movies that would play at ~2am when I was a kid.
There are definitely times when I think the movie would look great with a clearer image, but I also think the tone of the film would lose something had it been filmed any differently.

Watche it in 2003 and never again since cos wasn't impressed. Watching it now with the knowledge that such cameras were used. We will see