Years ago I actually spent a lot of time working this thing out too. If you have a quality VHS/DVD recorder combo you can definitely get very decent results by doing copies straight to DVD (preferably in XP mode). You can also hook an old VCR up to a DVD recorder and make a standalone copy.
The most important thing is to have a quality S-VHS player to get the best signal out of the old tapes and decent cables (you can really notice the difference between very cheap ones and some that are a little more expensive).

I for one spent quite a few hundred bucks on this by buying an old mechanic Panasonic AG-7350 S-VHS recorder which was even used in TV stations back in the day. It works great but is quite huge too. I hook this one up to a Canopus ADVC-300 analog/digital converter (as far as my knowledge goes there are even devices that upscale to HD nowadays but the question is if the prize is worth the small amount of quality improvement) and record it (via firewire) as an uncompressed avi file to my PC (using Sony Movie Studio). The advance the Canopus device gives you is that you can control certain settings (colour, contrast, audio gain, levels etc.) via hardware before doing the actual transfer. That method is quite time consuming, but gives you the opportunity to clean up the sound afterwards and author a nice DVD.
The outcome of your work also depends on the kind of MPEG encoder you use, the Canopus Procoder is the most recommendable one, but costs a shitload of money. A nice alternative is going for the TMPGEnc DVD Author series which has a good encoder built into the program (and it easy to use too).
Since we have a few hundred of tapes from back in the days and a ton of home videos too I really spent time to figure things out here.

I hope this helps a bit, if you have any further questions feel free to ask or drop me a PM