The main difference between the pci tuners, and an AIW type card, is the delay from the input signal. You won't notice it when watching TV, but you will definitely notice it when you plug up one of your video game consoles, and notice all the controls are reacting .5 - 1 second after you actually executed them.
The AIW type cards are much better, still a slight delay, but in the .031 (or 1/32nd's) of a second range. I can play ps2, xbox, and gamecube all through my AIW with no problems. Only recently noticed the delay when I actually turned on my tv and had the same show on, and it sounded kinda like an echo in a small room (ie the echo was heard almost as fast as the live sound).
I experimented with 3 different pci add in tuners, and all ranged from .5 - 1 second delays. Tried an ATI TV Wonder Pro (software encoder), got .5 from it. I was prepared to live with the .5 second delay, and just play my games on my TV, when I noticed that it didn't have the option to pause live tv. So it went back.
Diamond PVR550 (I think is the name, hardware encoder) got 1 second. The 1 second delay, again would've been acceptable, and I would just play games on my TV... but the software included with this package sucked balls. Forced me to load .NET ... which I don't want, and certainly don't want to be forced to use. Couldn't change the video source without going through a web interface. One touch record was non-existant... had to run to the web interface, and schedule a recording
. Pausing live TV worked at least. But you couldn't, afterwards, choose to save the video recorded if you wanted to.
And Hauppage WinTV PVR150 (hardware encoder, I think), got .5 seconds. At this point, I knew my old AIW Radeon 7500 played my games perfectly fine, so I took the Hauppage back and upgraded to an AIW 9600xt, so I could still play my pc games as well.
The difference between a hardware and a software encoder, with current computer's, is negligable. Unless you're running a sub 1GHz machine, you won't really notice a huge difference for regular vcd quality... only when you start recording to dvd quality (720x480 mpeg2) will the difference between hardware and software be seen... though on a 3GHz machine, even the software encoder won't have much problem keeping up with a hardware one.