Also try virtualdub (
http://www.virtualdub.org/). It doesn't have a great editing interface (like for splitting/merging parts of a video--it can be done, but it's awkward) but it has superb capturing, filtering, and encoding capibilities.
You will also need something to encode your video and burn it (virtualdub doesn't support MPEG-2).
I have heard good things about a program called DVD Maestro, but I don't think it is in production anymore.
P.S. I don't recommend you buy Pinnacle, I have the non-deluxe version and it crashes a lot. :)
Hope this helps...
~psi42