Distributed Video Coding (DVC) is a new paradigm in video coding, which is receiving a lot of interests nowadays. Side Information (SI) generation is a key function in the DVC decoder, and plays a key-role in determining the performance of the codec. This paper proposes an improved side information generation scheme, which exploits both spatial and temporal correlations in the sequences. Partially decoded Wyner-Ziv (WZ) frames, based on initial SI by Motion Compensation Temporal Interpolation (MCTI), are exploited to improve the performance of the whole SI generation. In addition, an enhanced temporal frame interpolation is proposed, including motion vector refinement and smoothing, optimal compensation mode selection, and a new matching criterion for motion estimation. Simulation results show that the proposed scheme can achieve up to 2.3 dB improvement in Rate Distortion (RD) performance for video with high motion, when compared to state-of-the- art DVC.