Repro:
1. Set your Preferences > Input and Camera > Camera Smoothing to some value >0.
2. Rezz a cube.
3. Stay in Build mode, and sit on the cube
4. Move the cube by sliding the red, green, or blue axes arrows (for an easy dramatic effect, use the red-green corner arrow)
OBSERVE: shaky cam
= EXPECTED: I expect the prim and avatar sitting on it to move around smoothly.

Ochi made a video of this (jump to point 1:55) at http://www.youtube.com/watch?v=6_e2Be-sGUo

This definitely seems related to the setting in Preferences > Input and Camera > Camera Smoothing.

• Setting this value to 9 (the highest) seems to cause extremely shaky cam.
• Setting this value to 2 or 3 (somewhat low) seems to only slightly improve the shakiness.
• Setting this value to 0.3 (very low) seems to much improve the shakiness.
• Setting this value to 0 (turn OFF Camera Smoothing) seems to solve the problem. This can be used as a temporary workaround.