Depends on what you want to do with the movie.
In terms of quality, if you're watching these videos on your iPod touch or even on your computer, you're not going to notice any difference between what's available to purchase through iTunes and what's on DVD. That being said, however, it depends on what you want to do with the movie.
iTunes allows you to either purchase or rent movies. It's really easy to find one that you like and really easy to download it. The iPod touch can hold a few full-length films, but not a lot of them. So maybe renting movies off iTunes would be your best choice. But if there are a few films you'd always like to take with you, buying them off iTunes or ripping from a DVD might make more sense.
Note however, that movies take up a lot more disk space than songs do. If you rip a lot of DVDs to your computer, for one, your iPod won't be able to store too many of them, and two, your computer will slowly run out of space. Also note that ripping DVDs is usually a little more complicated than simply purchasing movies from iTunes.