I did a compare one day using the same clip burned to DVD from iMovie 06 and from iMovie '08.
The iMovie 06 clip looked like it came from the DV camera directly and the iMovie 08 clip looked much worse. The difference is the single field processing used by iMovie 08 and the fact that it throws out every other horizontal line.
If your primary workflow is editing DV clips and making DVDs, iMovie '06 is better suited. Your movie will arrive at iDVD in DV format, which is an ideal match for making a DVD: same resolution, same pixels aspect ratio, and original quality. If you share your movie from iMovie '08, it gets re-rendered at 640x480 or less, and then iDVD upscales it back to 720x480. The end result is obviously not as good.
iMovie 06 and iDVD 08 is a terrific combination.
The Web site below has a good comparison of Apple video products.
http://www.geethree.com/slick/imovie8.html