HD videos, using Sony HDR SR12E, software help?

I recently bought a Sony HDR SR12E, which I love, especially because my old camcorder was very low quality. My new camcorder records great quality videos, in 1920 x 1080i resolution. I have a decent PC (Dell 1555), but opening or editing my videos is a problem.
Firstly, none of my media players (VLC, DivX) will play the videos without freezing, any ideas as to what I could use for this? I really don't want to have to spend all my time converting MTS files.
Secondly, (and more importantly), I need advice about editing software.
I've used Sony's Movie Studio before, which I love, but I was wondering if upgrading to Sony Vegas Pro would be worth it? I'd love to be able to produce really good quality films rather than the lower standard I usually churn out

I'm pretty sure that's all the info I can give you, so, some help please? Anyone got recommendations?
 
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