I purchased Sony Vegas because, at the time, it was one of the only software packages that would work with the file format that my video camera recorded in (when looking for a software make sure that it works with the file format your camera records in). My Sony camcorder records in AVCHD. Windows Movie Maker for XP does not support this file format. Windows Live Movie Maker in Windows 7 does support this format.
Sony Vegas is easy to work with and like MissMagic said, similar to Windows Video Maker. I had to spend the money just because of the video format. I use this software for my editing and am happy with it.
I also received Adobe Elements for free with the purchase of Photoshop. Everytime I tried to pull in a large file it would lock up and have to do a ctrl+alt+delete and kill the program. When I could get a file in it was not user friendly. I couldn’t figure out the transitions or the sound. I gave up on it.
Long story short. If I could have used the free product from Microsoft I would have just used Movie Maker. Instead I had to purchase Sony Vegas just for the file format. It works for what we do. I usually just make videos for my kids by adding home videos, pictures, and music which the watch in the car, not anything special. Sony Vegas cost me $100 at the time.