Your Canon is a MiniDV camera which is best "captured" through a firewire port (MiniDV is designed with this capability in mind). You did not specify how you captured from your camera to your PC, but it sounds like you did an analog capture, which would explain why you ended up with a 20GB file. As previously mentioned, DV captures should be about 13GB per hour. Huge files are a fact of life when dealing with video editing. Since 120GB HDs can be had for $65 or so right now, is that such a big deal?
Normally, end-product viewing formats, like MPEG2 (DVD), are not suitable for full-blown video editing because they use temporal types of compression. DV format, on the other hand, is suitable for editing because each frame is still present (the frames themselves are compressed). Therefore, DV files are usually considered "source" files and must be compressed into a proper format for the medium desired (MPEG2 for DVD, MPEG4 (DivX or asf) for computer viewing). MPEG2 will compress that 13GB DV-format file to a 4.7GB DVD file with still very good quality. Use MPEG4 if you just need to watch it from your computer -- you can compress it much further with still very good quality.