What format should I digitize mini DV tapes with HDV footage in?
You have a few options for capturing Mini-DV tape.  The first and highest quality, but largest size, is to capture it in HDV format (HDV2 is used by most Sony cameras).  It is a form of MPEG-2 Part 2 video.  This is the same as the format actually stored on the tape.  Storing your files as HDV will preserve the quality of the recorded footage, but it will take quite a lot of space.  This is ideal for high quality archives and any footage that will be used as a source for editing.  It only requires a firewire port and DV capture software (which is also built in to most NLEs.)

If you only care about viewing, then your best option is probably to initially capture to HDV and then transcode to h.264.  h.264 is a high quality compression that you can tweak for the quality/size trade off you desire.  I'd personally recommend either a constant quality or a 2 pass VBR encoding for maximum quality to size.  This doesn't require any specialized hardware beyond the initial HDV capture and can be done entirely in software with free tools (which may even be able to leverage GPU acceleration depending on your video card.)