Go with Firewire if you can, the file is transferred with audio and video embedded in a digital bitstream. Firewire is digital from start to finish - and it's fast.
S-VHS only gives you separate Luminance and Chrominance signals and they are analogue. The audio will need to be transferred via separate cable(s) - and it will be analogue as well.
Editing? I'm using Sony Vegas 4 and DVD Architect 1. Good programs. Will be upgrading to Vegas 6 and DVD Architect 3 soon. These are industrial strength stuff and pricey but they provide the same power as $100,000 worth of gear in a Betacam SP edit suite did ten years ago.
There are quite a number of good consumer-level editing programs and capture cards that will do the job if you are on a budget.
A look at
www.video-editing-software-com will be helpful and provide up-to-date info.