Further Handbrake development is dead in the water at the moment. Those looking for the "newer" builds of Handbrake in beta testing form should google MediaFork, as they've picked up where Handbrake left off.
Don't forget Handbrake Lite as an alternative GUI for no-brainer iPod conversions.
Lastly, those who want to encode for those "whatever" generation iPods that support H.264 encodes at 640X..., ffmpegx makes it even less taxing on your brain with a preset in version 0.0.9x (0.0.9x r2).
To answer the original poster's question, your encode specs are determined by your iPod's ability to play the older or newer profiles, as you stated you want the video playable on both your handheld as well as your television.
Keeping things under 1G, a Handbrake encode from SD WS DVD to H.264/AAC for monitor and/or television viewing would be somewhere in the area of 704X384 @ 1200kbits/sec (2-pass).
The resulting file for both Fifth-G iPod and television would be 640X352 @ 800kbits/sec (2-pass) with AAC 48000 Hz @96kbps.