First, by "video card" I assume you mean "capture card". Whatever you have now is likely fine for use as a generic video card, unless you want a new speedburner for playing newer games.
Some capture cards are simple firewire cards that will take data from a DV (or D8) cam or analog->DV conversion device (a "DV Bridge"). This is a simple no-loss data transfer and results in an AVI file at about 14GB per hour. If you want to edit the video, this *is* the format you want to use. Once edited, you can render to an MPEG format for DVD, VCD, etc. or to other formats - Real media, Windows Media, etc.
There are several pieces of software on the market that can encode to MPEG in real time with a DV input. This saves time, but once in MPEG format, editing is difficult & fraught with problems. Plus you need a fast PC, and the software I've seen doesn't do as good a job as the offline encoders like the one built into Vegas. Yet. As CPUs get faster, this won't be an issue. In fact, maybe they're already there; I haven't looked at this kind of software in a year or so. But I digress...
The bigger problem is, you need something to feed a DV input. Either a DV/D8 camcorder for several hundred $, or a DV bridge for a couple hundred (look at the Canoupus line).
The other way is to use a hardware MPEG encoder. This can be a $100 unit (I use a Hauppauge PVR250 for quick & dirty encodes) to "expensive". These have a chip onboard to do the encoding, so you don't need a whizbang PC. Their quality is between real time software encoding and good offline rendering, with price loosely determining where the unit lies in that range. This is very nice for quickly getting a lot of material to DVD, but you are limited to only basic editing. Basically, cuts only on I-frames (roughly two possible edit points per second). And any transitions or titles will cause re-rendering that will hurt your video quality MUCH more than it would in AVI editing.
As for sound cards, what are your sources? If all sound comes from the video, you'll just use the capture card or DV bridge. If you have other sound sources, will you do surround? If you're only going to generate artificial ambience or build pans and your original sources will be stereo, then a stereo card will work fine. Echo MIA or M-Audio Audiophile for $150-ish, or possibly the M-Audio Revolution for <$100. If you'll have multichannel sources, then an Echo Mona or Layla or similar will be needed.
It's probably best to figure out EXACTLY what you need to do, and build the rig to do it most efficiently.