I found the Pinnacle MovieBox grainy, choppy, and low quality.
I did this using iMovie 06 and iDVD 08.
iMovie 06 is a free download to iLife 08 owners. (THEY WANT YOU TO HAVE IT!)
http://www.apple.com/support/downloads/imovieHD6.html
I use both iMovie 08 and iMovie 06, if I want to make a DVD I much prefer iMovie 06. iMovie 08 is not as DVD friendly as iMovie 06.
iMovie 08 has replaced "Share to iDVD" with "Share to media browser". Also iMovie 08 cannot set chapter markers, this has to be done with another program.
To get your VHS video into iMovie, look at the Canopus ADVC300. Audio and Video go in, FireWire comes out. It also comes with a nice Macintosh application that works flawlessly with iMovie 06 and iDVD 08 (not sure about iMovie 08).
The program that comes with the ADVC300 has some nice filters that can improve video and audio of the source material. The ADVC300 will take Audio and Video from any source and convert it to FireWire (iMovie will treat it like a camera).
http://www.canopus.com/products/ADVC300/index.php