IT ...

I made my first vcd (about my baby, Sean).
With,
http://forums.gentoo.org/viewtopic.php?t=117709 (format conversion)
Windows Movie Maker (capture from DV and categorize).
Ulead VideoStudio (add menu and music, then burn to CD).

Things to note,
To get the higher quality, use AVI (pal) to capture from DV. Make sure your harddisk is fast enough! Windows Movie Maker tends to hang, maybe due to the files too big :)
Ulead VideoStudio 8 doesn't support ac3 yet.
use transcode and mplayer to convert,

transcode -i $file.wmv -x mplayer,mplayer -y ffmpeg -F mpeg1video -Z
352x288 --export_asr 2 -o $file -D0 -E 48000,16,2 -b 224 -N 0x2000 -s2 -m
$file.ac3 -J modfps --export_fps 25

for dvd,

transcode -i matrix.avi -y ffmpeg --export_prof dvd-pal --export_asr 2 -o
matrix -D0 -s2 -m matrix.ac3 -J modfps --export_fps 25