Capture format and output format for analog to digital

Hi.
I am using Ulead 7 for converting analog VHS to digital format. As my
input is analog, does it make any difference as to which capture
methoud I choose (MPEG or AVI), let's say size makes no difference.
And then when I'm done editing, again because the original was analog,
does it make a difference whether I uotput to VCD, SVCD or DVD? Again
say the size is not a factor, I'm talking only of quality.
Presently I'm doing MPEG to VCD, should I be doing to AVI to SVCD? Or
MPEG to DVD? I'm confused.
Thanks,
Larry.