These are all free options.
For video converting (e.g. divx, xvid to touch format mp4) I use this
http://nodadev.wordpress.com/pc-projects/ipodme/
It's the fastest converter I've ever used, takes about 9 minutes to convert a 40 min video file.
For dvd ripping, I use Handbrake, which has an iPod touch export preset. I use that preset and then tell it to limit each video to 175mb. However, it doesn't have a dvd decrypter (due to copyright infringement reasons) so you have to download dvd43 too and run it in the background while you're ripping. Handbrake takes about half of the duration of the media you're ripping (e.g. 1 hour for a 2 hour movie).
Handbrake can convert video too but I just find IpodMe so much quicker.
http://www.dvd43.com/
http://handbrake.fr/