I, too, have Vegas 4. Both Vegas 5 and 6 have an added ability to use a "2-pass" encoding, which makes a much better, clearer picture when using lower bitrates. It also takes longer to render, but it really may be worth it , depending on the subject and the bitrate. So, if all your DVDs are about 50 minutes or less, you probably don't need that feature, but as you go beyond the 1 hr and 40 minute mark, added artifacts will start to appear on 1-pass encoded mpg2s. In fact they'll appear on shorter DVDs in the darker areas of the picture too. But if they're below the 1 hr mark, then 1-pass encoding will look good. Just use as high of a bitrate as possible.
Also, you can use the frameserver to serve the 'timeline' to a different mpg encoder, like I do. I use TMPGEnc for my 2-pass encoding and I love it. It's around $50. or so. Can be found with a google search and I believe has a 30 day mpg2 trial. At least it use to.