Movie making?

This has probably been asked and if so point me in the direction for the answer, I can not find it...

I am taking vacation footage from my Canon zr50 DVC through the firewire into Microsoft Movie Maker. I am editing it in the story line to make a home video. Now the question... The file is going to be quite large. Should I just do the project as I have described and save it as I go? Or should I be changing the format or shrinking it? If so how should I do it? I can delete the file after I burn it to free up space later. Any help would be appreciated.

Well it depends on the final product... What is your size you would like? For a dvd or a cd?

Theres an option when you click "Save movie file" WMM2 lets you select an option like "Best fit to file size" and it'll change the resolution and quality so that the file will be that size.