Basic capture and edit

I am trying to figure out the best combination of hardware and software for non professional environment, but with good results.
For years I have been filming to document various sports video and editing it for friends using consumer equipment and getting an acceptable video. I also understood that the video feed through the lipstick cam would not have the same quality. But, I recently bought some better equipment and software because I wanted a better end product. I have a Sony PC330 mini dv, my computer is dual core plenty of ram and HD space, firewire capture and sony vegas pro 9.

The problem is that the video to the tape comes out fantastic, but between the capture and render, it still comes out to VHS quality. I know that the software is fine, but are my limitations through the hardware? Is there a consumer capture card that will capture at a higher quality? 720x480 is enough for me, but I am losing clarity and the videos posted to youtube seem to have a better picture than the ones I produce, uncompressed on my computer (at least uncompressed to the best of my knowledge).

Just looking for some basic direction.

thanks,
Paul

If its going into the computer though firewire than a capture card is pointless to buy as it wont ever get used.
The problem seem to be at your output settings in Vegas. Mark did a few tutorials on how to export to youtube and other sources, you may want to look into those.