VR is activated as long as live view is open or if the shutter is half pressed. Its effect is rather significant during video shooting, smoothing off movements and shakes and seemingly making the image glide. make sure its engaged on the lens. I myself had issues with VR and the d7000. sometimes it doesn't engage - turning the camera on/off or re-seating the lens always solves the problem.
just tested it now, and efexone you're right. VR is on in live mode. seems like i just move around too much in the field. When i tried it again at the house it was a lot better.
I'm currently testing out a 24-120mm vr lens for a walk around stablization lens. Jury is still out on it.
I have two VR lenses I use for video. The Sigma 17-50 ƒ/2.8's OS isn't particularly pronounced but it certainly does work, and it takes out the most obvious tremble. Worthwhile. More impressive is the VR in the Nikkor 105mm ƒ/2.8. As a close-up portrait lens I find it's workable handheld on a D7000. I hadn't really expected that, it's quite a long lens.
For video, Tamron's VC is superior. I've got their 17-50mm and 70-300mm, and they're insanely stable compared to any VR lens. I can make it look like the camera is on a tripod if I concentrate hard enough. The VC system just works differently. If there's any drawback, it's that it's slower to activate when shooting photos, but it's instantaneous like VR when you turn on LV.
I second th3 105mm G VR ... its remarkable how its able to translate motion into creamy pans. I'm looking into the 16-85 G right now. I had one a year ago, but got rid of it before I got really deep into DSLR video.
If you check out my video from Cyprus (http://vimeo.com/25478410) there is a rather complex pan around 0:40 mark. Id say its pretty impressive. Hand-held, 17-50 sigma.