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Just to add, if you are creating your own DVDs you should never use DVDShrink. You will get much better quality if you encode the video and audio at the proper bitrate, leaving enough room for authoring and muxing overhead. There are many tools that can do this if you don't like doing calculations yourself.
You can also really improve the quality by not using Divx or wmv to compress before converting to DVD. Use VirtualDub and capture in a lossless codec such as huffyuv. MJPEG might also be suggested.
Since you goal is VHS to DVD, I would preserve the interlace.
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