For DV footage, anything below 4.7 minutes per gigabyte is going to start being sub-standard for editing. That's the standard data rate for lossy compressed DV footage. Each generation of compression and the lower quality you make the compression, the less suitable for video editing it becomes.
If you use a highly lossy format to store the video, after you edit it and try to encode your final video, you will have a sloppy mess because the source video is too low quality. It will make you have to increase the settings on your final output to preserve any kind of quality and will mean you have a larger final product than you could have otherwise gotten away with.
By modern standards, 60GB is about $4 of HDD storage or $5 of optical. Just buy the extra storage if you need it.
If you still want to compress it more (or if you aren't yet at 4.7 minutes per gigabyte) then any standard DV format would work well. It isn't quite as ideal for editing, but a high quality (high data rate) h.264 high profile VBR 2-pass could be used as well. Using 3500 KBPS (I'd probably also try all I frame and see how it goes) should give you a good high quality compression. It is worth noting that h.264 is more demanding for editing with though. That's still not going to give you any lower than the 4.7 minutes per gigabyte though, so if you have around 5 hours of footage, 60GB really is as small as you want to go.