so that worked for you huh?
As far as digitizing your VHS stuff, you will need to BUY more than just a simple cable. You will need to buy a thing like the Formac DV thingy (for converting and importing non DV sources, such as from a VCR).
That should import in DV format.
From there you can edit that DV footage in iMovie. Once done there, you can put it on a DVD using iDVD. (that's the free approach as far as software goes)
Personally I would be using Final Cut Pro and DVD Studio Pro. The advantage here is more control over compression settings, that would allow one to fit more on a DVD (ie, work at native VHS resolution, play with variable frame rates, and compression settings.. lots of stuff)
You will probably end up fitting only an hour or so on a DVD. I think iDVD has an option for more compression too. Play around..