Vhs capture: 720x576 or less?
I think you want to capture at 640x480. VHS uses interlaced video, so the recorded content provides half the lines every 1/30th of a second. The effective resolution is horribly low, 352x240.

Have a look at VHS capture DIVX information, which seems to discuss all the issues. 

Regardless of the workflow you use, be sure your de-interlacer is high-quality or the output will suffer greatly.