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Thanks for this interesting example; Lotus. I had also tried this function, and been disappointed by the results, so I am glad to know it wan't user error.
On my side, I tried the "stabilisation" yesterday in a church (daylight, with a low, great, overcast cloud ceiling. Here are two shots, one done manually (1/15s, f:2.8, ISO1600), and one with stabilisation (1/60s, f:2.8 ISO6400). The feature also alters the default settings in LR (no sharpening at all, no NR), and I am pretty sure it involves in-cam NR.I then applied PP to my liking on both. Let me know what you think...
NEX-5 f/1.0 1/60 sec 6400 ISO 0.0 EV
NEX-5 f/1.0 1/15 sec 1600 ISO 0.0 EV