What sort of tapes are these (VHS, VHS-C, digital)? If they're analog, like VHS or VHS-C, the 1394 isn't going to be usable. 1394 is employed by digital camcorders to transfer the digital video to the computer. USB 1 (which yours almost certainly is, the faster USB 2 has just started coming out) is not really fast enough to transfer full-motion video. So if you're talking about analog tapes, you'd best use a video capture card like the ATI All-In_Wonder Radeon, and you'll need a fast computer to keep up with the incoming frames. A capture card will do about as good a job as possible, but there's no such thing as lossless capture. You'll get a bit of degradation no matter what, but probably not enough to notice. And you'll need a DVD burner as well. I think these are coming down in price, but they're still in the $600 range.
There is also the video format known as VCD (see the link I posted at the beginning for a site to get more info on this), which has been said to be of VHS quality, and is burned to a standard CD instead of a VCD. Most newer CD players can handle them.
Depending on your budget and willingness to endure hassles, maybe you'll want to consider a service. LifeClips will transfer many formats of tape to a DVD-R for $29.95 (for a tape of up to 2 hours. Plus shipping)
The faster the processor will render (compile) the video faster, but the capture speed is entirely dependent on the speed of the recording device (hard drive).
Would there be any advantage to doing the digital conversion "in camera"?
What I mean is, line the analog video source into the digital camcorder and record. I do not have a digital camcorder (they came out the year after I bought on) but have lined video source materials into my camcorder to store video on 8mm (especially when I am editing because of the flying erase heads and improved resolution on my hi-8 cancorder).