Pro's & Con's of hardware vs software encoding????

Hello,
What are the differences? I'll be making some SVCDs & DVDs, soon.
I'm in the process of building my new system. But I'm trying to
figure out which is best hardware or software.

I've noticed that some disks have color problems, is there a way to
solve this and how? Especially with captures from vhs. Can the color,
sharpness, etc...be fixed?

Is the a hardware capture device that input a/v into the device,
the device encodes to MPEG2/svcd or dvd???

Thanks