I don't think it does any DV conversion on the S-Video output. Video captured from the DCR-240 will most likely look better, as you avoid having to use composite, and the TBC functionality of the camera(on by default) helps stabilize the unstable analog video signal coming off the tape. If you are in PAL land you may encounter
issue with the far right edge being discoloured which may not happen on the older camera.
Of course, since you have both options, it should be simple enough to do a test yourself to see what you prefer.