You can capture with one software
Edit with another
Output to DV AVI with yet another
and then encode to mpeg2
before using one last one to create a DVD.
This is often a long winded process which doesnt always guarantee the very best quality
That may be just as related to how good your original footage is
There are ( as discussed above) packages which have all the steps in one and are probably worth sticking with .. for now
Windows Movie Maker is free, and combined with Nero Vision you can capture edit output to DV AVI, then use Nero to Turn this into a DVD ( It wil encode to mpeg and do the DVD authoring seamlessly
I like Uleads Movie Factory: when it works ( which is most of the time) it simply does what it promises
Although seemingly free software exist, It is my experience that they may be limiting in, ease of use, features and output quality such that the paid for one may well turn out to be better VFM
Some software hold your hand to the point of distraction and others just put you off by their complexity

I don't think needlessly complicated software is any great advantage either though as you need may be far simper than all that
Most folk have their own favourites
Finally I echo some of the sentiments above. Although HDDs are by not means infallible.. I would still rely on them more that DVDs .. even the very best , stored very well and recorded in optimal conditions can let you down whem you least expect it
Whilst I dont use divx ect, I do keep ISO images ( or nero equivalent : *.nrg) of DVDs projects which I can then turn to DVDs iif need be and they play perfectly well
I also can mount them as virtual discs to play on Nero Image drive ( and similar programs)
Finally outputting as images is a painless way of producing multiple copies
Many of the packages have trial downloads, and are learnable . Even the seemingly harder ones to use have a "newbee" mode

Good luck in your search