Capturing video

I´m buying a Canopus ADVC-110 analog to digital external video converter. I´m gonna use this to convert old VHS to DVD.
The thing is that this product has very good quality but no mpeg2 hardware encoders and gives to the computer dv(.avi) format via fireware. So because of the space on the HD and because it´s the compression used for DVD, I need to capture the video directly in a mpeg2 file. I´d like to know which program could i use to do this with quality.
Is the speed of my internal HD a problem for this (details below)?. Using the external HD to save the files would be better?.
I´m thinking of using Vegas Video to edit the videos.

I owned a laptop Toshiba Tecra A4 1.73 GHz. Memory 512 Mb. Internal Hd 5400 rpm. External HD Lacie 250 Gb 7200 rpm 8 Mb buffer.

Thank you.

Instead of the Canopus, why not look at the ADS PYRO AV/Link with Adobe Premiere Elements included for around $159.00. Check out www.videoguys.com. They highly recommend the ADS with the adobe for capturing/editing…

My recommendation would be to capture in DV format as you say you want to edit the captured files. Take the hit with the file space as you can get quite a bit on 250Gb. If you capture half a disk (to leave room for writing out an edited file) you should be able to get 10 hrs of DV onto disk. Aim to do just one VHS tape at a time. 1Hr = 12.6Gb approx.

The crucial thing is the sustained writing rate of your disk - it needs to cope with 3.5MB/sec - which is standard DV data rate. Shouldn’t be a problem. Then do your editing and then encode to MPEG2 and author your DVD. After you are happy with the result you can delete the original captured file as you can always re-capture from the original VHS tape if really needed.