I've used ATI Wonder All-in-one cards for captures and they are pretty good for VCR captures. When you do a capture from VCR to a digital format you need to capture using a real-time compressor, something like the Morgan M-JPEG codec V3 from
http://www.morgan-multimedia.com/m3jpeg.htm is good one to use. Capturing this way creates an AVI on your computer which you then can compress into whatever format you want, like VCD or DVD. They might be some software that lets you capture and compress straight to MPEG or MPEG2 format, but I would imagine you need a pretty powerful computer to-do this in real-time (I think Power DVD Producer does captures in MPEG and MPEG 2).
Best guides I’ve found are on;
http://www.videohelp.com/ (look under capture and convert)
http://www.doom9.org/ (guides)
I’ve also come across TMPGEnc DVD Author which lets you author DVDs once you got your MPEG2 files ready. You can easily create menus and chapters with this software.
Actually you don’t really need the ATI card (although its suppose to be one of the better ones for captures), any graphics card that has video input will do. There is huge amount of open source software which is powerful enough to capture, edit and create VCD and DVDs out there. Again check that videohelp.com site out which has numerous guides on this.
Ali