Standard DVD has a maximum resolution of 720X480 and a maximum bitrate of 9.8Mbps including audio and video. To get the best quality you can put 1 hour of video encoded at 8Mbps constant bitrate and LPCM audio which is 1536kbps and equal to 16 bit/48KHz. With a dual layer DVD you can use the same settings and put 2 hours on a disc.
Depending on what kind of material you're encoding you may be able to put more onto a disc and still get good results. For low motion video you can put more on a disc and it will still look nice. For heavy motion stuff you need to stay at 1 hour or less for best results.
Blu Ray is a whole other beast that many of us still have not gotten into because it's still expensive compared to standard definition and still in its infancy really.
I have seen a few people who shoot material in HD encode it to HD WMV files and play them off their PS3. If you are starting off with standard definition it won't do any good to try to convert it to HD really.