I've been using Sony Vegas Studio (about 70$). I originally bought it because my sister and I wanted to do our own MST3k-like reviews and we needed something that could edit out green screens.
Being completely new to Video making (I only started using it a couple months ago when the big pony craze started), I've gotten the hang of it quite well. I'd say the only annoying limitation of this cheaper "lite" version is the inability to cut out specific parts of the video frames (like cutting out the animation of someone running and putting it on a different video), but considering those high end versions are 500+ dollars, I think it's a bargain. It's definitely a step beyond...
Windows Movie Maker
This used to be associated with being utter crap within the AMV community, but the new version for Vista and W7 is actually really great for being free. Plenty of good bundled effects and transitions and proper HD support. This is good if you're not planning to have a video laden with all sorts of trippy effects. You can still make some good videos with it. I'm pretty sure it's what FluttershyElsa uses for his videos (look up Pony Polka or Sexy Naughty Bitchy Rarity) and they're edited quite well for such a limited program (I think he's using XP because they're not in HD) Only real downside aside from that is there's really no way to edit speed so if you're looking to make Music videos with perfect lipsync and timing, WMM isn't for you. As far as I know. Again, total n00b here.
Lightworks
I heard about this program
via Lifehacker but I haven't tried it. It's a free Open Source Video Editor. Judging from the description, it definitely has functionality on par with Sony Vegas (it's got Timing options and support for having multiple layers of effects). It's free so it might be worth a shot for you.
Just a recommendation, find the proper RAWs floating around out there (I'll PM you if you want). A lot of good PMVs which are otherwise good are marred by Logo infested TV rips.
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