Transferring from analogue to digital using a DV cam is probably the least hassle free method. Just make sure your cam has the ability to accept incoming analogue signals.
You can get quality to adequatly replicate the analogue source by using a PC. Indeed, with a dedicated converter such as an ADVC50, you'll have no issues with quality. Problems start when you try to use an old system and/or don't read the manual/have the normal PC driver etc issues

.
You'll probably have no worries if you buy a dedicated converter, but you'll minimise potential problems by using your cam.
As for the multimedia system, check out this forum:
http://www.videoforums.co.uk/forum14.html
The quality of DVDs played through my system is better than any DVD player I've ever used.