[Michael O'Connor] "My computer has been great for vegas so far but it is quite a bit behind what you are suggesting (pentium 4 cpu 3.06Ghz 1gb ram on windows xp pro)."
Yea, I'm afraid you're not going to edit HD with a Pentium 4. After the Pentium 4 came the Core Duo, then the Core 2 Duo, then the Core i Series (i3/i5/i7). So your processor is 4 generations old. It's really time for an upgrade.
You also should be prepared to upgrade to Windows 7 64bit. There aren't many NLE's that work on XP anymore. Vegas Pro 11 doesn't support XP. I'm not sure if version 10 did or not. It sounds like future versions will only support 64-bit.
[Michael O'Connor] "What do you feel is the biggest advantage of upgrading to pro 11?"
Coming from Vegas 7 I couldn't begin to list all of the improvements. The biggest is probably that it can edit AVCHD rather easily on a modern computer and Vegas 7 can't. So it's not a matter of why upgrade, it's a matter of you MUST upgrade if you want to edit AVC/H.264 AVCHD. You can't expect software that is 4 versions old to edit new camcorder formats that didn't even exist back then.
If you want to stay with Vegas 7 and XP Pro you might want to look for an HDV camcorder. That was the popular HD format back in those days and Vegas 7 should be able to edit it easily although it was still tough on a Pentium 4. If I remember correctly, Sony recommended a 2.8GHz Dual Core computer and 2GB of memory as the absolute minimum requirement for HD.
[Michael O'Connor] "And finally is there a problem when you film and edit in mixing HD and SD, or is that something you would never do?"
You can mix them but the SD is going to look noticeably softer as it gets upscaled. There are plug-ins that help with this like Boris FX BCC UpRez but I would avoid it unless it's footage that is already shot and you can't re-shoot it.
~jr
http://www.johnrofrano.com
http://www.vasst.com