Best file format for private viewing

[HEdwar2013]

I have been looking over a couple different discussions as of late in regards to what file type/file format to use when setting up or configuring your own media server. I thought I would stop by here and get opinions on the best options for what I'm doing.
Here is some basic information about my setup:
Video files being viewed: Mainly TV Shows, DVDs, short films
Current file types: Usually .mp4 or .avi (Divx or others)
NOTE: I've been using these two formats primarily because they play well through my PS3 or my iDevice.
Programs being used: AVS Video Converter (converter program), PS3 Media Server

I know it seems a bit mundane but of the different file formats available I am looking to get the best quality video for the least amount of space. When I compared the .avi and .mp4 files in most cases it appeared that the .avi format was twice as large as the .mp4 files. I also took the time to review two of these files in their respective formats and couldn't really see a noticeable difference between the two.

I looked around the forums here and didn't really come across anything that stuck out at me. If this question has been asked in the past, please kindly point me in the right direction and I will proceed there. Also, I am familiar with PC terminology as well as most video jargon.

I'm mainly looking to get a feel for what the majority of users are using and what kind of success they have had.

Thanks in advance!

[Cornucopia]

The container has very, very little to do with the filesize (as overhead is miniscule compared to the actual video+audio stream payload).

First, check with your users to see what devices they are using, and either create multiple formats to handle lots of contingencies, or use some most common denominator, such as h.264+mp3 in mp4 or mkv, etc.

Then, understand the cardinal rule: FILESIZE = BITRATE * RUNNINGTIME. And Quality is proportional to bitrate / complexity * codec efficiency. Since h.264 is by far the highest efficiency codec commonly available (especially using the x.264 encoder or Mainconcept Reference encoder), it makes the most quality sense to use that codec type for video. Differences you may have noticed probably had more to do with the fact that one of your examples used h.264 and another DIDN'T (so required a much higher bitrate).

More to come depending on your response...

Scott