I've been trying various tools over the last few days to covert DVD movies to use on my iPod. The two biggest problems I encountered where: 1) Black bars at the top and bottom of the screen. I don't want those. The iPod screen is already too small. 2) The audio and video are usually out of sync. Looks like a badly dubbed Samurai film.

If any of you are having similar problems, I've found a pretty good solution using mostly free software.

Here are the tools you'll need:

1) AnyDVD (you'll eventually have to pay for this, but you get a 21 day free trial to see if it'll work)
2) DVD Decrypter
3) StaxRip
4) 3GP Converter

Steps to convert a movie:
1) Make sure AnyDVD is running. It turns out the audio and video sync problems are usually caused by software copy protection schemes encoded in the DVDs. I found that DVD Decrypter by itself did not correct these problems. Just by having AnyDVD running in the background, DVD Decrypter will correctly rip audio/video.
2) Use DVD Decrypter to rip the .VOB file of the movie stream and the primary AC3 audio scream. Uncheck the other streams. (There are other guides on this site to using DVD Decrypter if you need help).
3) After you have your .VOB file, open it in StaxRip. StaxRip will do some preliminary processing of the file. Once that's done, adjust the resize setting so the width equals 320 and the height equals 240...the dimensions of the 5G iPod screen.
4) From the View menu, choose Crop. Here, press the S key for Smart Crop. This should crop out everything except the center of the video. (Think: Pan & Scan). Press Close.
5) Now, from the Profiles menu, choose Encoder - Xvid - Xvid - Constant Quality. (See below, you may be able to encode directly to H.264 format).
6) Make sure your ac3 audio track is listed in the Track 1 position.
7) Make sure your Target has the correct output .AVI filename. Change if necessary.
8) Hit the Next button until encoding begins. Encoding will take a while.
9) After encoding finishes, I always open the .AVI file and jump to the end to make sure the audio is still in sync at the end.
10) Open 3GP Converter. Again, there are guides here to using 3GP Converter. Basically, you want to choose the iPod profile. Then choose the MPEG4 QVGA/768 kbps option. (Every time I chose the AVC/H.264 option, the audio got out of sync again, so I don't use it).
11) Drag and drop your .AVI file onto the 3GP Converter window. Your movie will now be encoded again, this time in MPEG4 format. Again, it will probably take a while to complete. When it's done, iTunes will open and the video should be automatically added to your library.
12) Sync the video to your iPod.

This is not the fastest way to encode movies, but it seems to work most of the time, and the results are pretty good. You might be able to skip the 3GP Converter altogether if you have the Nero AAC libraries (I don't), as StaxRip has a profile for converting directly to H.264 video (which the iPod will accept).