The Dazzle device with Pinnacle capture/editing software is rather good, that's what I'm using at the moment.
There are three versions, I bought the middle one, priced at 50 quid which gives you Pinnacle Studio Ten lite and a device that plugs into a USB port which interfaces with three phono/RCA sockets, one for video, two for audio.
The software has everything I need, as well as the usual conversion to mpeg files will also convert to DivX.
You will need a processor of at least 1.6Ghz and a lot of hard disk space, btw.
Once captured in digital format, I use Nero to burn to DVD though I believe Pinnacle Studio Ten also has the ability to burn disks.