Tylerknight is 100% right: the better the quality you start with, the better the quality you will finish with.

A standard definition DVD plays video at right around 8kbs. A Blu-Ray is around 18kbs (for video stream, plus audio). So you are capturing BluRay quality video at the source. This will give you a sharper, cleaner output than if you shot at, say, MiniDV quality (which is closer to, but still more than DVD).

Not to mention, by shooting in HD, you may "future proof" your videos if you find a distribution channel later that accepts only HD.

And one last thing, not all 8kbs is created equal. I highly recommend you do a 2 pass, VBR encode to maximiaze the quality you can squeeze out of those 8 kbs. And again, having a higher resolution and cleaner source will maximize that process as well.