Even when I'm not on vacation, I like to keep a digital still camera close at hand. A typical still camera captures more image resolution than a camcorder; plus, I like to send snapshots to friends and family. Most camcorders sold today can also shoot still images, so you've no doubt accumulated a bunch of photos. If you use iPhoto to organize your pictures, you can easily grab them from within iMovie and add them to your movie. And with the Ken Burns Effect, you can add some pan and zoom effects to make the photos more interesting. At this stage, it also helps to add background music to your movie (if you choose). Later, you can edit your clips so they're timed to your tunes.
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