I have tried to use the built in video stabilizer using virtually ever setting possible on multiple clips with very little stabilization occuring. I have had to resort to Virtualdub to get any decent results which is a real pain.
The best is to use the build in camera video stabilizer normally you have 2 levels available. Also you can use a monopode or tripod when you shot but sometimes this is not available you can use a specific device stabilization or you can build your own stabilization equipment. Normally software stabilization is not as good that we think better to try to do well before than correct after. Video is not only an art but technique to yield a good or a poor result.
My comments would be similar to John's. The Temporal setting I often crank up to 2000 or less and this works very well in smoothing out jerky pans and zooms. Also if you click in the monitor of the Stabilising window and draw a larger box than the default over an are that is most shaky and contrasty (as John said) it can work better. A larger selected area slows processing down though although the latest version MEP18MX has been much sped up by the better utilisation of multi core CPU's.
It seems to work better on some types of movement than others and sometimes it just doesn't do much at all - like on subtle constant sharp jiggles.
One other draw back is that it does not correct for roll axis (Z) movement so I have bought the Prodad Mercalli V2 plugin for MEP which while expensive works phenomonenly well - Fast, very customisable in 5 axis and even corrects the Jelly effect caused by the rolling shutter effect in Cmos chip camcorders. Try the demo and you will be hooked!