Turbo.264
If you have some $ to invest. I would get the Elgato Turbo.264 ($85 from Amazon). It converts 2hr movies from AVI/MPEG to iPod Touch format in around 25-30 min. Using Quicktime it took me 1hr+ before. I am using a First Gen MacBook Pro 17" Core Duo 2.16ghz with 2gb RAM.