I would recommend MP4 as it's the future. You can always go to DVD and then RIP to have files on demand, but that's up to you. That process also recompresses footage, but that's not really an issue since VHS is already a pretty bad format to begin with.
Few things to note about VHS.
1. It's analog and unstable, so you need a good VHS player with a time base corrector to stabilize the footage.
2. It has dirty edges outside of the frame, so you need to crop it somehow if you are going to go to MP4 so you can have clean edges. You will definitely need something like Premiere Pro to do this.
3. You will need something like the
Intensity Shuttle for Thunderbolt to capture via Composite cables (RCA).
The Decklink cards come with their own capture software and it's fairly easy to use. You can use the MJPEG codec to start with then convert to whatever format you want, or create DVD's out of them.
I mention MP4 (4:3, non widescreen) because it's easier to store on hard drives and copy around. DVD is still a good format for archiving, but if it was me, I would do MP4. You can always go from MP4 > DVD, but make sure your MP4s are of the highest quality possible, but you can still save space and use higher compression/lower datarates since VHS is a fairly terrible format already.