Many camcorders record directly to MPEG. Look for one that does that and you can send it straight to your computer as a video file instead of having to buy editing software.
Although with Windows XP's build in "Windows Movie Maker" you can simply hook up your camcorder to your firewire port and record digitally from your camcorder. I do that a lot and the result is pretty good. You'll have to have a way of compressing the videos though because WMM saves them at about a gig for just a few minutes.