Your problem has a very simple fix. The camera which you have is not compatible with SDHC cards. It will only work with regular SD cards.
Your camera is incompatible with the later SDHC specification at the basic hardware level and so cannot format the card which you have purchased.
Note that SD cards are available up to and including 4GB and SDHC start at 4GB so you're not the only person to have made this mistake. In practice there are very few devices designed to use regular SD cards which will work correctly with 4GB SD; Aiptek only designed and tested the IS-DV up to 1GB SD capacity (see page 48 of the user manual)
, so this is the effective limit to the largest capacity memory card which you can use, if you try larger capacity cards they will either not work at all or will make the camera operations sluggish and you also risk damaging the card itself so that it will no longer correctly format. Aiptek never released any firmware updates to improve the SD compatibility on your camera.
I'm sorry not to be able to offer any way to use your current SDHC card but at least I may have prevented you making another purchasing mistake. Please return the favour by rating my answer.