My friend has the exact same problem on the PC
Smooth when not moving mouse (using wasd to run like you were).. but as soon as he turns the camera even the slightest amount with the mouse, everything turns all jerky just like in your video
I was going to buy the game, but now I'm going to wait until I see that a patch is released to fix it.
EDIT: I should also note... it's not just a nuisance or cosmetic problem... it is literally impossible to aim like this... it's also not a performance issue since FPS is running solid (especially considering the specs of his computer).. there's something just buggy as hell in the code that makes the screen jerk around the second the mouse input goes in.
Edited by Hathur, 28 May 2010 - 07:27 AM.