When I lived in Wales, many years ago but Welsh is a very old language, it was impressed on me that a single 'F' was pronounced like a 'V' whereas a double 'Ff' was the normal soft 'F' sound. So yes, Vestiniog it would have been. technically.
Could Vyrnwy once have been spelled with an 'F'? Your late neighbours have a point: why would Welsh use a 'V' when they already had the same sound using the 'F'?