Film and Digital Times has an article on image stabilization written by Larry Thorpe, National Marketing Executive for Broadcast & Communications, Canon USA Inc. It's based on a lecture he gave at NAB 2010 on how image stabilization works. The article covers the two major systems of stabilizers work: Vari-Angle Prism IS and Shift Lens IS. The article is in PDF format.
Film and Digital Times: Image Stabilization by Larry Thorpe