This is one of many very cool technologies that Microsoft offers (for free!) yet is kind of a well-kept secret. I have talked with lots of people who want to encode videos to play on a mobile device. Say you got a 20Mb video file (MPEG, AVI or WMV) that you want to stoe in a SD card to be played on your device.
With Windows Media Encoder you can simply choose Mobile/PocketPC as your target and the software will automatically select the right settings for a smaller screen and reduced bit rates. If you understand the lingo, you can change the frames per second (I find 15 fps and sometimes 10fps to be perfectly acceptable) and the bitrates for both video (don't go lower than 100Kbpps) and audio (select a higher rate for music, voice works ok with a low bitrate).
The key value is efficiency: I have compressed 30-60Mb videos down to 2-4Mbs which fit in the internal memory of a WIndows Mobile phone. For the most part, plpayback qualify is unaffected. I am looking for a legal way to RIP a full length movie and see how big it ends up after encoding. I bet I can squeezze one or two in a 1Gb SD card.
You can download Windows Media Encoder 9 from this link.