So I upgraded to Creative Suite 5 and imported a Premiere Pro project I’d been working on. The preview for my Panasonic GH1 AVCHD 720p files was a bit messed up. It looked “jumpy”, i.e it pixilated and seemed to move up and to the left every second or so. After messing around with drivers, turning of Mercury GPU acceleration etc I ran into a tip on the DVSUser forums.
To fix the issue, right-click on the playback video, and select Playback Resolution/Full. It was set to 1/2 by default.