Encoding MPEG2 is very processing intensive work; the hardware MPEG2 capabilities can be very helpful. For one, it can encode MPEG2 at full resolution, which is something like 720x480. I don't know that software-based cards can do this; I think they're limited to half-resolution. The CPU utilization is fairly high when recording with a software-based card too; with the PVR card, it's a very small performance hit - only maybe 4% CPU utilization on an XP1500 processor. This means that you can easily use the computer without it being slow, and without risking dropped frames in the recorded file.
I own a WinTV-PVR. The drivers suck; Hauppauge doesn't seem to be updating them anymore, despite the fact that they
still sell the card on their website for $200! Check out
this forum; I gather that one of the moderators there has ties at Hauppauge.
But anyway...the card itself is quite impressive - I think its MPEG2 encoding quality is fine; I encode at 8Mbit Variable Bit Rate, and I can't see a difference between live TV and the recorded file. But that stuff chows down hard drive space like crazy.