I'd opt for a DSLR. It won't come with lights or mic but they're available cheaply from ebay and elsewhere. A Canon 550D with a zoom lens and the accessories you require will be well within budget. If you have any old film lenses you'll be able to use them via an adapter (typically £10-15) on the Canon. You may even buy the 600D on budget - as 550D but with articulating screen.

To get the same quality and flexibility in a camcorder would be more expensive though camcorders may be easier to use if you're already familiar with their operation.