This is actually pretty simple. Your DV Camcorder uses a compression format called "DV" (!). When you capture the video over a firewire connection, you will have an AVI file that is ~ 13 Gig (for 1 Hr) 720 x 480 resolution in DV compression. You need to convert it to DVD format which is also 720 x 480 but is MPEG2 compression. Full quality DVD is 8000 KB/s bitrate. Even if you put 2 Hrs on a DVD disk @ 4000 KB/S, it still looks very good.
The 4 Gig file size limit is easy. Dont use Fat32. NTFS all the way!
A very nice, very easy to use program is Pinnacle Studio 8. It has great capture and easy to use yet powerful editing/chapter/menu tools. If you shop around, you can find very good deals on it. I got mine free after rebate.