Go to an Apple Retail Store, they have a whole section devoted to educational developement games. If you do not live near an ARS (like me, not one within a 7 hour drive), you can go to the Apple Store Online and look around there.
As for the VHS/VCD to DVD.....
Unless you have a digital VHS player (do they even make those?) you'll need a way to go from the VHS analog RCA video out to the digital iMac Firewire post so that iMovie can recognize it. Unfortunately, I have not seen one of those for less than 300-400 dollars.
Unless you can find an RCA to USB adaptor, which you might for around 100 dollars. It'll probably give you another level of conversion once you get it on the computer (will input at square pixeled 320x240 standard VHS res, and DVD res is non-square pixeled 730x480) but it's cheaper, and the final product will look very much the same. You'll also need some program capable of doing the conversion (QuickTime Pro for only 30 dollars is an AWESOME deal!) I don't think that iDVD or iMovie will accept video at any res other than 720x480 but you could try before you purchased QT Pro. VCD to DVD will probably also require QT Pro, but I've never done anything like that, although if all else fails, just run an external DVD player playing the VCD through that adaptor and go from there. VCD like VHS has 320x240 res so again you shouldn't be losing much quailty.
I'm sure someone will correct me that you are losing massive quality, but with the kind of conversion you're talking about, you don't have much a choice. Maybe do one and see what it looks like, and decide if you can live with the look of the final product.
Good luck radhak, feel free to ask for clarification!