Your end product will be compressed both in-camera and in creating the MPEG-2 files for DVD authoring. To maintain quality through the flow you naturally want to start with the best available source material, and that's 3-chip DV (in your price range, that is - and mine). If you go this route you'll automatically have manual white balance (particularly handy in flourescent or other institutional lighting situations) manual exposure with zebras, external mic input and other handy features. But you will also have good quality full auto (white balance, exposure, focus, shutter speed) until you learn the ropes.
David Hurdon