This is a relatively low impact process, and you have many simple alternatives for attacking this project.
1. Getting your photos into digital form.
If they were all taken with a digital camera, or have already been scanned to digital format, chances are that they are in jpeg format. If that's the case, you can proceed to step two. If your photos (or at least some of them) are in the form of prints or slides, you'll need to scan them.
If you have a single project and don't want to go through the hassle of scanning them yourself, there are service bureaus that will scan them for you and return the images on a CD-ROM. (They will also make the DVD slideshow for you if you want). I used myspecialphotos.com for a large batch of 35mm slides (which take up to 3 minutes each to scan at home) and I was happy with them.
If you choose to scan them yourself, the good news is that scanner prices are down, and scanner quality is up. I have owned Microtek, HP, Canon, and Epson scanners over the years, and I think the Canons are the best value/features currently. I would recommend a scanner that offers a built in slide scanner if you do have slides from time to time. (I recently came across boxes of family slides from my childhood, and it came in handy). While it would seem to make sense to have an automatic feeder for processing lots of prints, I have yet to find one that didn't have complaints about jamming and breaking, so I end up feeding each print in.
You will want to scan 4x6 prints from film cameras at a minimum of 300 dpi, and preferably 400-600 dpi, and slides at a minimum of 2400 dpi. This way the quality of the scan is sufficient for producing a very clear image. Try to avoid scanning from a print made on a home printer, the resulting quality will generally be poor. If you have the original digital file, it is always best to use it rather than a scan of a print of the file.
While this is off the subject, I rarely produce prints from digital cameras at home, as it ends up being more expensive (once you take into account the cost of photo paper and ink cartridges) and of lower quality than using a service like Shutterfly, which makes it very easy to upload digital images, turns around orders in the same day, and costs less than 20 cents for a 4x6 beautiful print.
2. Authoring the DVD
Entry level authoring packages are generally given away free with the purchase of scanners and digital cameras. While they might be simple (and free), I think the most expensive part of this process is your learning curve. Ideally you would like to use a package that can handle more challenging projects as you grow without having to start learning a new package. To avoid this, I would recommend Sony Vegas Movie Studio + DVD. An "entry-level" package priced at under $70, it is affordable and has quite a few features. Best of all, it is the little brother of the full-featured, top of the line Sony Vegas + DVD, which is the package that I use. That means that the interface is the same, the software is rock solid, and when you decide to step up, the learning curve is far less steep.
Vegas, which was originally developed by digital audio/video pioneer Monty Schmidt and his extremely talented team of programmers at Sonic Foundry in Madison, Wisconsin, is extraordinarily well thought out, richly featured, and rock solid. The full Vegas+DVD package is pricey at $500, and overkill for a simple project, but has everything you need for professional audio and video production, and is the rough equivalent of Final Cut Pro, the professional standard for the Mac (only).
Most of the editing packages work the same way. You drag and drop the photos onto a timeline, determine how long each should be displayed, and pick a "transition". In order to keep your viewers from becoming comotose, I'd recommend three seconds per shot (including the transition time) with a maximum of four. Any longer is deadly. Then you add a music track, and voila. Remember that music is generally copyright protected, and unless you are using it under the legal definition of fair use, you don't have the right to reproduce it on your DVD. Making a copy to play at a birthday party or family gathering (as is the likely venue for this first level) is generally fine.
In any case, the packages I am familiar with will require that the music file not be digitally protected in order to work. That means that the mp3 file you legally ripped from your own CD for your own use on your iPod (or for that matter, illegally downloaded - shame on you) will work, but the protected AAC/MP4 file (.m4p) for which you shelled out 99 cents at the iTunes Store will not work.
3. Burning the DVD
You'll need to have a DVD writer (also called a "burner") on your PC and blank writeable DVD discs. Most machines sold today have CD-ROM writers, but DVD-writers are still generally an upgrade. You won't need the more expensive "rewriteable" DVDs for this purpose, but you will have to choose between two formats: DVD-R and DVD+R. Some burners can use either (the DVD-R discs are a bit cheaper), but if your burner only works in one format, make sure you buy that disc. Blank discs are available at offie supply stores such as Staples and Office Depot, or online at buy.com and elsewhere.
Once you've mastered the still photo slideshow, it's time to move on to integrating those home videos into your DVD.