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An easy-to-use app for making custom DVDs topped my wish list for months. DVDStyler fits the bill nicely, and it's free.
DVDStyler accepts any unprotected video file format under the sun. Simply drag and drop or browse for your AVI, MP4, WMV (or whatever) unprotected videos, and put them where you want on the DVD. I liked how straightforward DVDStyler is to use. Set each video file as its own Title (like an episode on a TV on DVD disc), or set each one up as a Chapter within a single Title (like how a movie on DVD is divided into chapters).
Note that DVDStyler won't make video files themselves. I used VLC and a FireWire cable to stream video from my tape-based video camera first, and then saved each video as AVI. DVDStyler is the next step after that.
Aside from the video files themselves, it's easy to customize the DVD menu how you'd like it to be using the included templates. There's even a handy Play All menu item, which you don't always see on even commercial DVDs.
I had trouble using DVDStyler burning the completed DVD package to a double-layer DVD using a Toshiba internal DVD writer, as it kept failing to write. The vendor states that DVDStyler uses dvd+rw-tools to burn DVDs, and that it seems that this open source software has problems with some hardware. Whatever the reason, there's no cause for worry: I had DVDStyler make me an ISO disc image instead, and used industry standard DVD burning software ImgBurn to write the ISO to disc. The resulting DVD worked perfectly in both an Xbox 360 and a cheap, generic standalone DVD player.
My recommendation is to use DVDStyler as a step in making your homemade DVDs how you'd like. Make an ISO with it, then use a burning app that's specifically designed for that purpose to actually make your DVDs.