Most mainstream software can do what you ask ( including VS 10 which you have tried) Im not sure why the PQ is as you say " appaling"
There are many " suggest editing software" threads which can give you a shortlist: you can
start here
and add
Womble to that shortlist
I must however say that
1) cheap is relative and ultra budget will probably dissapoint
2) easy is also relative as you may get on with one software program more easily than another: All can be learnt and prove easy to use with time
3) Cheap, easy to use may not always mean stable and well behaved on your PC
4) DVD footage from camcorder is already mpeg . Not all software will not reencode the Mpeg and the result will not please you. Infact VS10 "smart encodes" but you may need to configure it to do so
Ive had VS10 for a month and while I didnt like its earlier incarnations, I quite like it
I am reluctant to suggest Pinnacle Studio 10.5 but if unlike some you get it to work on your system without problems it is certainly worth trying.