to be honest, don't ditch the hi-8 any time soon, unless this thing takes off and you start bringing in some coin. For the quality of the web, you aren't going to get better video by upgrading to a dvd/minidv/flash camera. Your reason for upgrading down the line will really mainly be for audio purposes, since the more expensive cameras can take several audio inputs which makes interviewing and getting nat sound much nicer. And it will be for the lenses, which will shoot wider and therefore you won't have to stand 10 feet back just to frame up an interview.
Far more important than your hardware is your shooting and storytelling technique. There's a reason the pros are the pros, after all. It's not as easy as most people think. If you want any advice on that, I'm sure Gucci or myself can help you.
I'm going to disagree with Gucci about Avid. IMO it sucks, first of all, as an editor - -it only really shines when you start working with their direct-to-air systems, which you don't need and can't afford anyway. A lot of the editing flow is pretty archaic and requires extra steps that just shouldn't be there. I've used Avid Xpress, Newscutter, and Media Composer (I've also used Chrome, but that's actually software they bought from Pinnacle and so it's not /really/ Avid) (and it sucks anyway

) and they all have that central weakness. Additionally, it takes an act of God sometimes to import certain video formats.
I didn't see you say whether you have a Mac or a PC. If you have a Mac, Final Cut Pro is an excellent editor (blows Avid out of the water IMO). Go that route. If you have a PC, Premiere Pro is just as good. Get it. The learning curve for a non-linear editor is pretty steep, especially if you've not edited anything before, but FCP and PPro are both pretty logically set up. You can also get keyboards that have the FCP or PPro commands marked on the buttons to make it easier to remember how to work it.
i would recommend that you go here:
b-roll.net
and read everything you can find, look at the video, and lurk on the forums. There's a lot of good tips in there on both shooting and storytelling.
Let us know if you want any help or any critiques of your work.