The program I use is called VSO Convert X to dvd. It converts pretty much any avi into a DVD with menu's and chapters and all... I :ahem: acquired it from the pirate bay. They have a demo version that watermarks the video... not sure how bad or obnoxious the watermark is.

If you want a free way to do it... check videohelp.com, it's a great resource. They have numerous howto's for converting from just about any format to just about any format.