hayakuu -
Correct, don't bother with h264. mpeg4-2 is faster to encode and will be of HIGHER quality (at max settings) than h264 video on the touch.
H.264 takes about twice as long to encode but is of higher quality at the same file sizes.
Again, please stop saying this as it is completely incorrect as far as the iPod touch is concerned. "mp4" (mpeg4-2) will generate BETTER results than h264 (mpeg4-10) on the touch because h264 is crippled on the touch.
To give you an analogy...
I take a VW Bug (mp4) and pit it against a Corvette (h264). Who wins? The Corvette of course... Okay, now I say that the Bug can do whatever it wants but the Corvette can't shift past 2nd gear and it's a 20 mile race. The Bug wins because the Corvette is crippled.
This is exactly what's happening here. H264 IS the better codec but the implementation that Apple decided to go with crippled it to the point where the previous codec is BETTER.
Why did they do this? Because H264 is a resource hog. CABAC decoding, 2x2 macro blocks, B-Frames...they all take a huge hit on system resources. Put simply they were left with a choice: Support the new format ("Apple's" format, mind you) in all its glory and have 1 hour of battery life or support it in a trimmed down version and have good battery life.
Just to clear something up, however...H264, even on the touch, will not yield bad results. It will still be good quality video, but "mp4" will be slightly better. As has been pointed out the quality is so similiar that it's nearly impossible to tell the difference. The only time you really can is in fast action sequences and scenes with a LOT of detail. But considering that the touch screen is small how much detail do you -really- see?
So the ultimate question of which to use? MP4. It's faster, it will be better quality, the touch will have longer battery life (by maybe 5 minutes).
Ask again when the next touch supports Main or High profile Level4+ H264 and H264 will win.
Apple themselves encode their own videos in h.264, no?
Yes, but...
Quicktime supports multiple streams from one source. Apple has actually re-encoded every video they have (that works on the touch) to the baseline-3 H264 profile for the Touch and keeps the extended-5.1 videos for everyone else.
Huh?
Okay...You view the video on your desktop you get one version. View it on the touch you get another. The one on your desktop CAN'T play on your touch but the technology is so seamless that you never know that they do this.