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VHS to AVI

For hardware you need a video input card or USB device. such as the ATI AIW's or pinnacle.. there are a lot look for some reviews.

for converting check out www.doom9.org

it's a very helpful resource for all types of video converting and capturing.
 
Depends how much you want to spend really. Canopus makes great capture cards. If you are just going VHS (composite in or S-in) there are many options. dvdrhelp.com has a ton of reviews for different capture cards..

Pinnacle Studio 9 captures to avi and is pretty solid software.
 
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