My aim is to get the character rotating left/righ when moving the cursor on the x axis, and the camera rotating up/down when moving the cursor on the y axis. I made the camera a child to my character and attached this code to the character.

var speed = 4.0;

function Update () {

    var ray = Camera.main.ScreenPointToRay (Input.mousePosition);

    var hitdist = 10.0;

    //Character rotation

    var targetPoint = ray.GetPoint(hitdist);

    targetPoint.y = transform.position.y;

    var targetRotation = Quaternion.LookRotation(targetPoint - transform.position);

    transform.rotation = Quaternion.Slerp(transform.rotation, targetRotation, speed * Time.deltaTime);

    //Camera rotation

    targetPoint = ray.GetPoint(hitdist);

    targetPoint.x = Camera.main.transform.localPosition.x;

    targetRotation = Quaternion.LookRotation(targetPoint - Camera.main.transform.position);

    Camera.main.transform.rotation = Quaternion.Slerp(transform.rotation, targetRotation, speed * Time.deltaTime);

}

At the moment the left/right rotation is working fine but the camera isn't rotating at all, and it's very fidgety for some reason. Would appreciate any tips.