I use (amongst other things) an ATI VIVO graphics card connected to a VHS player.
Capture to Studio 8 and output (after editing) to DVD writer via Nero.
Card cost about 45 quid
VHS player came out of the loft!
Studio 8 cost 25 quid from a mate who couldn't get on with it!
Not bad? 70 quid to become a budding Steven Speilberg