making video files as small as possible for iphone??

hi..

im converting 350mb avi files to mp4 using ffmpegx [ipod tv setting], this gives me files approx 230mb ,[ a 40min video].. the quality is good .. however i am going on holiday so want to squeeze a much video as possible on my phone.. anyone got any suggestions for compressing more with minimal loss of quality ?

 

tried next option in ffpegx, ipod h264, got a 700mb file to 125mb, resolution seems very low but looks ok on iphone jus a bit grainy.. worth it for 20% of the space..