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If you mount the camera anywhere on the bike you will always get a lot of vibration/shake, mounting it on your head/helmet will give you a smoother result as you naturally 'float' your head about your body as you ride, it acts as a steady cam / vibration dampener.
Also if your camera has optical image stabilization switch it on, electronic stabilization is not as good (you take a quality / resolution hit) but the shaky image thing is such a big factor that I would use it in this circumstance.
Also a cheap wide angle lens (or converter) screwed on the front will improve bike footage massively as it not only widens your field of views but also smoothes out the shot. You can get real 'el cheapo' plastic clip on jobs from Jessops for around £20. I would go for a x0.5 or x0.6.