Good tool to use to compress & convert video?

Hi folks. I just started using iDVD 6 and I wanted to know what tool to use to compress video so I can fit more on my DVD that without compressing the files. Also, what do I use to convert my MPEGs to a usable AVI file? Thank you!

iDVD will compress your video.
Also, what do I use to convert my MPEGs to a usable AVI file?
These MPEGs came from...where? iDVD likes digital video (.dv). Especially from a camcorder that uses MiniDV tapes.

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