"In a technical sense, the VIDEO_TS folder already contains the video data in DVD format. A Video DVD is the contents of this VIDEO_TS folder burned onto a DVD+/-R disc in a hybrid ISO9660+UDF filesystem. See this related question for more on what the folder contains.
If you already have the VIDEO_TS, you do not need an encoding tool. Many data burning utilities can create Video DVDs, but you need to make sure they don't try to burn as a data DVD -- data DVDs won't necessarily lay out the files in the proper order, and may use the wrong filesystem for the disc.
If you have the mkisofs command available (in the Terminal on MacOSX and Linux, or Windows with Cygwin), or the hdiutil command on OSX, you can make a ready-to-burn ISO with one of the following commands (source, from Davide's answer):
# INPUT_FOLDER is the folder that contains the VIDEO_TS
