I have mini-dv tapes in good condition that have to be digitized. A straight transfer would yield a crummy picture because to go digital means to upscale.
This is incorrect. Your DV tapes are shot at standard definition, 720x480
*. The resolution of a DVD = 720x480. You are not upscaling in any way, shape or form. Your **DVD player** might be capable of upscaling and trying to play them on your widescreen HDTV, but that is a completely different matter and has no bearing on either what's on the tape or what's on the DVD.
* Do not confuse this with "720p." HD resolutions like 720p or 1080p refer to the vertical resolution, not the horizontal resolution. If your tapes were shot, as you say, on a "non-HD video recorder," then your DV tapes were not shot in HD, period, so "720p" is not your resolution, your tapes are Standard Definition (720x480), there's no upscaling going on and they should be transferred to a standard DVD. Only video *originally shot* in HD need to burned to Blu-ray in order to preserve their original resolution.
Therefore the tapes need to be digitized and the format will be mpeg2 files.
This would be happening anyway. Importing DV tapes means digitizing them. MPEG-2 is the standard video codec for standard-definition DVDs.
I could pay an extra $10 to get each file transferred to dvd, saving me time and hassle trying to find a decent and free dvd burning program that actually makes menus (good luck with that, right?).
Nothing I know of makes DVD menus as nice as those found in iDVD, though Toast provides a reasonably good alternative. Given the amount of time, hard drive space and effort it takes to make a "movie" DVD using iDVD or Toast, I'd *GLADLY* pay someone $25 to do it for me.
The extra $10, I presume also gets you (on the same disc if there is room or on a second disc) a "Data DVD" of just the MPEG-2 file conversions. This too seems reasonable to me.
But I need the confidence to spend that much money all at once. That's my dilemma.
Well, this is easily fixed: have one done, and test the results (preferably by watching the DVD on a standard-definition TV, not an HDTV) to judge the quality. There should be no difference whatsoever.