The above tutorial doesnt really work anymore.
The Baseline profile in Handbrake doesn't work now, as the iPod now requires Baseline (Low Complexity). You can convert it in QuickTime Pro (if you have it) to iPod format (.mv4) or set the profile to Low Complexity if you export to mpeg4, but the easiest way to do it is with iSquint.
The workflow I use is;
* Rip the DVD using MacThe Ripper if I'm doing several at once, otherwise straight to step 2
* Encode using Handbrake - 2 pass encoding, H.264, Baseline, 1,000-1,500kbps (you can go higher if you want)
* Convert with iSquint - Optimise for TV, H.264, Standard quality
It takes a while but you get a 640x480 mpeg4 file that is perfect for the iPod and plays back well on a tv, it's even watchable on a 42" tv. Movies are about 400-700 mb, so you could fit loads on you iPod.
I have 35 movies on my 30G, along with 10G of music and photos. All the movies were done using this method. There are also some YouTube videos I downloaded, and iSquint is perfect for converting these.