If one of your movies is 2-6 gigs at SD - then you are ripping/using files WAY too high. I have stellar movies both at 720 and SD that are under/just around a gig.
Most of my movies are ripped over a year and a half ago using Handbrake at 720 so they are Apple TV compatible and won't actually play on my iPhone. I ripped them with AC3 Pass-through for Dolby Digital (if I remember correctly it has been a while since I ripped anything). And I used around 1500kbps bitrate H.264. I know I could have gone lower but the consensus at that time was that was the desired bitrate for a movie to play well on Apple TV on a 50-60" screen. Could be slight overkill. I need to rip the rest of my DVDs, probably another 40-70, can't remember. Those movies tend to be 1.5GB on average. Longer movies are more in the 2-2.5GB range, such as each of the 6 discs of the extended LOTR set or anything in the 2-3 hour range. The HD movies I get from iTunes run 5-6GB on average for the HD version of the feature.
As I remember I Handbraked a couple titles, Fight Club, The Score for my iPhone at 480 with a lower bitrate and they came out at 500MB or so per flick.