I am using Videora on my iPod 5th gen. There is a selection for iPod Touch when converting the video to make the best quality for certain devices.
I like it. It works well. I am recording TV using my PC, then converting it to iPod format. Works great! I have 2 movies I have done so far. Converting takes a bit of time (2 hour movie takes about 1 to 1 1/2 hours) to convert. But it works great if you don't mind waiting.
Oh and Videora is free. You can donate to them if you like the software!