I like to edit our home movies, which are shot using a Sony DV camcorder if anyone's interested, and mostly I just want to sequence the result to send to the in-laws (i.e. cut out the swearing and occasional nudity). Windows Movie Maker is more than equal to the task, but I do pine for slightly more control over the effects and transitions that one would get with a more expensive package. Luckily many of the things I want to do are supported using custom XML files, as you can see in this excellent guide: Creating Custom Effects and Transitions in Windows Movie Maker. Does free software get any better than this?
For instance, here is a timelapse of Little Haven beach created using a custom video effect: timelapse.wmv (6MB). I also used the periodic shutter facility on the camcorder that took 6 frames every 30 seconds, then the (custom) x6 speed-up effect was applied to remove 5 of the 6 frames and give a more "traditional" timelapse effect.
I got the tip from the forum on this excellent site: Windows Movie Makers