Pretty much any home video/consumer video editing software will do.
My advice is stay away from Pinnacle Studio since it is very buggy, unreliable and the GUI is needlessly resource-intensive.
I use (and reccommend) Ulead Video Studio 8: it's very stable, is very easy to use, and fairly inexpensive. You can drag your MPEGs straight on to the filmstrip, and add music, record voiceover, use impressive effects and transitions. And it is a breeze to make DVD menus, with animated backgrounds and scene previews.
There are much more advanced things out there, but I think this is ideal for your needs. There will however be cheaper software out there which does much much less, but will allow you to do the bare minimum of what you require (get an MPEG onto a DVD and add a menu).
It is $49.99 at
Amazon, well worth the money.