If you’re happy with the footage, that’s great and I’m happy for you, but personally, I wouldn’t settle for it.
You are right, Sony bought Vegas from Sonic Foundry (The company that used to make Vegas, Acid Pro, and all their other hi-tech software offerings). Actually, they pretty much absorbed the whole company. But from what I could tell, the biggest change from Sonic Foundry Vegas 4 to Sony Vegas 5 was the company name on the startup screen. They cleaned a few components up, but more or less, it was the same song and dance with a new name.
I have Vegas 6, the "big brother" of Vegas movie maker that you bought. More features, more spendy. But I’ve tried editing MPEG-2’s on it, and as a pro, I am not fond of the quality. There’s a lot of compression problems on the re-encoding. I think the salesman was hyping up his product to get you to buy it.
If you think your MPEG editing looks alright, then I’m telling you, try MiniDV. You’ll never go back. The quality is infinitely better, and in the end, you’ll have a nicer product.
Then again, if you’re primarily doing kids’ videos and whatnot, a DVD camera might be acceptable, but as a pro, I personally won’t buy one myself.
