I'm usually using a standard TV card.
I connect the VCR's video output directly to the TV card, and the VCR's audio output directly to the input of my sound card. It's definitely FAR from perfect, but it's quick and "good enough for me".
Software - InterVideo WinVCR for video and audio + Cool Edit Pro at the same time for lossless audio.
If needed, I'm doing some post-production cleanup with AviSynth + VirtualDubMod (both have fantastic filters).