In the longer focal lengths, yes it is that much better.
If you want to take pictures that are not so blurry, especially if you are having trouble using a telephoto lens, look for a camera or lens that is designed to help you eliminate this blur caused by slight hand shaking. This technology is known as "image stabilization," "vibration reduction," "shake reduction," "optical stabilization," and "anti-shake" by the various manufacturers. It is "for real" and makes a visible difference most of the time. If you are using an average point and shoot camera without a monstrous zoom lens, you will see the difference in lower light situations where the camera will be using about 1/60th of a second or lower.
If you are using a telephoto lens, the effect will be noticeable at roughly anything slower than the inverse of the focal length, which used to be our standard for deciding when you should use a tripod. If it's a 200 mm lens, you will see the benefit of "IS" or "VR" at speeds of 1/200 or slower. If it's a 500 mm lens, you will see the benefit of "IS" or "VR" at speeds of 1/500 or slower. Actually, you will notice a difference at slower speeds than this, but I'd say that this threshold is where it can be called a distinct advantage. Macro shooting benefits from "IS/VR" also, because any movement will be greatly magnified when you are working at extreme close range with high magnification. Also, I feel that "IS/VR" helps if you are using a point and shoot camera at arm's length as you compose in the LCD monitor. It is much harder to hold the camera still with your arms out in front of you. "VR/IS" would be helpful there, even with the shorter focal lengths.
Please understand that "VR" or "IS" (etc) will NOT stop motion in a moving subject. You need to use a high shutter speed and/or pan along with the subject in order to do that. VR is only to minimize the effects of camera movement to give you a better chance at getting a clear picture. It won't work miracles there, either. You have to at least TRY to hold still. You can't go down a bumpy road in speeding car and expect to get great shots.
This is a composite I made to demonstrate "vibration reduction," which is also called "image stabilization" and "shake reduction" by various camera and lens manufacturers. For the best results, you should click on "All Sizes" and then "Original" before making your comparisons. I tried to remain consistent for all three shots, but I guess as clouds move in and out, things varied by an f-stop or so. I do not think that depth of field is an issue in this test, though. I did not move my feet at all during the test, so the point of view is identical. All three images were made using 1/60th of a second, which I consider to be the low shutter speed for hand-holding a 60 mm lens. I made a reference shot with my 60 mm Nikon macro lens, since I know this to be a fairly sharp lens. I tried to hold as still as I could, but I did not use a tripod, which would negate the need for "VR" anyhow. I then made two more exposures with the Nikon 18-200 VR lens, set at 62 mm. I was trying to match the 60 mm lens, but I did it by just remembering some landmarks and zooming to match. As I used the VR lens, however, I did my best to actually "vibrate" the camera by inducing a tremor in my hands as if I was shivering in the cold. I took one photo with the help of VR and one without. It was extremely odd to look through the lens as I shook my hands.
Since the VR was working, even though I knew I was shaking the camera, the image appeared steady in the viewfinder! Okay, compare the shots for yourself. You won't see too much difference in the top two, but the effect of vibration reduction is very obvious when you see how the picture comes out when "VR" is turned off.
Nikon D200 - ISO 100 - Nikon 60 mm Macro and Nikon 18-200 VR with and without VR
http://www.flickr.com/photos/samfeinstein/511455669/
I realized that the first VR demo (above) may not be a "real world" demo, as I was TRYING to shake during the exposure. Who does that? I was originally trying to answer a question for someone who had a problem with severe tremors, so I was trying to induce tremors in my own hands. Well, I should ask, "Who does that on purpose?"
So in this pair, I was trying to hold still for both shots. The white balance is different, as I am trying to learn about that, but I realized that the first shot I took had the "VR" turned off. Everything else is the same, because I didn't move and the shots were made less than 30 seconds apart. The exposures were the same for both shots. I did not do ANY post-processing at all, as that would defeat the purpose of the demo.
Nikon D200 - ISO 100 - Nikon 70-300 VR @ 240 mm with and without VR
http://www.flickr.com/photos/samfeinstein/755244335/
For a detailed, yet easy to understand explanation, see:
http://www.kenrockwell.com/tech/image-stabilization.htm
Popular Photography writer Michael McNamara has a piece about image stabilization on-line. The two schools of thought are to either put the image stabilization technology in the lens (as Nikon, Canon and Sigma do) or in the camera (as Pentax, Olympus, Samsung and Sony do). He says, "So far, lens-based IS has the lead, with one Nikon VR lens logging a 3- to 4-stop improvement (a few big tele zooms barely reached 2 stops). In contrast, the best result from a sensor-shift DSLR is 2 to 3 stops, with the average closer to 2 stops." Read the whole article here: http://www.popphoto.com/cameras/4615/image-stabilization-special-stop-the-shake.html There is a chart on page two that is a real eye-opener. Far and away the best at image stabilization is the Nikon 18-200 VR lens, which shows gains of 3-to-4 stops!