Are you just trying to archive them to disc or create a disc that is playable on your DVD player?
If you're just trying to archive them, you're doing it right by creating a data disc and copying the pics over. Unfortunately, this won't be playable on most DVD players.
If you want to create a photo slideshow, try NeroVision Express. As you've already noticed, the pictures will be shrunk down some to match the resolution of a DVD.
I'd recommend doing both.. archive the picturess so that you have them in the original quality and create a disc so that your parents can pop it in and show their pics to their friends.
"Blu-ray is just a bag of hurt." - Steve Jobs