I have been using ffmpeg with good results. I got the recipe from the ubuntu forums:
ffmpeg -i input_file.avi -f mp4 -vcodec mpeg4 -maxrate 1000 -b 700 -qmin 3 -qmax 5 -bufsize 4096 -g 300 -acodec aac -ab 192 -s 320x240 -aspect 4:3 output_file.mov
I playback on my 3100 with:
mplayer -vm -ao oss -vo bvdd:rotate=-1 output_file.mov
There is also a gui for ffmpeg specifically for this purpose called VIVE available on sourceforge.
Here is the link to the forum discussion:
Video encoding for ipodHere is the link to the vive project on sourceforge:
VIVE