I saw that many sites will use a video to show their service, so do you need to use video too?
I really think this depends on your product/service and your specific situation. Who visits your site? Will they bother to watch the video? Will that be effective with them? Just because others are doing it doesn't mean that necessarily should.
If you sell software/web applications, having a screencast of some sort to show off product features or how easy it is to work with the product may be a good idea. I definitely look at screencasts (if available) when thinking about purchasing software.
I have done some screencasts in the past (actually was working on one this weekend) though it is definitely a work in progress. I really like Telestream's Screenflow ($99, but WELL worth it. I can't see doing screencasts without it.) It allows you to capture video/sound from your computer, and then do all the editing and effects in one interface. There are other free applications to look at, though in my opinion they don't have the quality or editing options that Screenflow has. If you are on a PC, Camtasia is well known, though that is a bit more expensive. Probably only worth it if you plan to do a lot of screencasting semi professionally.