What compression should I use for archiving VHS tapes to HDD?
DV has a something of a focus on simplicity, so it can be encoded with primitive microprocessors and decoded quickly in an NLE. In particular, it's intra-frame: a DV file is basically an array of still-image files.
That's useful for professional editing; it means however DV can't achieve nearly as high compression ratios as more complicated formats with P- and even B-frames – space used to be not so much of an issue since magnetic tape fits quite astonishing amounts of data.

So DV isn't really a great format for archiving, it takes up not 60 but easily 10 GB per hour. And that for SD quality, albeit with very little compression artifacts.

h.264 is much more space-efficient, and its higher computional cost isn't much of an issue now everybody has a fast, at least duo-core processor at hand. You can easily get VHS-like–quality files down to about 1 GB/s with h.264.

It's pretty much the canonical format now. The main alternatives I'd suggest are free alternatives, mainly


Theora. Reasonably well-supported, simpler than h.264, not quite as that good as that- but still pretty ok compression-wise. And
Dirac. Highly sophisticated, really good quality/compression, but computation-heavy and not supported by anything consumer-grade. Not too well by professional stuff either.


This so far applies to pretty much any kind of video, not just VHS. All of these formats support PAL resolution; Theora doesn't have interlacing, but switching to progressive-scan prior to compression is no big deal and might in fact be a good idea anyway. Just make sure you use a good deinterlacing algorithm.