I agree, the default recording quality is atrocious. It also does not appear to be adjustable (accurate?). After some searching...
Granted, the link below is directed at Nexus One users, but I believe the same problem applies to our Incredibles -- namely that the codec being used by the system for audio recording is just plain rotten:
Why is the audio quality when recording video with the Nexus One so terrible? Especially compared to the iPhone - Android Help
That's right, it suggests default sampling is 4.75kbps, 8kHz!
I can't find any reference to that being adjustable, although it does seem that any given program could in theory be written to use the raw audio input, and save that instead of passing through the 8kHz codec:
Improve Android Audio Recording quality? - Stack Overflow
As a non-developer, I don't know how practical those code references would actually be, but they sounded relevant.
Anyways, if that above info is accurate, and it sure *sounds* like it is -- nonadjustable sampling rate locked in to circa-1990 quality -- then I don't know what to say. Seriously... HTC? Google? Care to explain before my head explodes?