The best free mac video converter for iphone please?

So far i used to add my avi files to my itunes library on my mac using movie2itunes. then i would right click on the movies and choose 'create iphone version'. i was expecting the video size to go down as the resolution and screen size of the iphone is much smaller compared to the resolution of the original avi file and the screen size of my macbook. so for all reasons it had to encode lesser data into the new file. instead, it keeps the same resolution! and while the original size is a mere 300mbs for 60 minutes of videos the new encoded file is a 550 mbs!
so i think using itunes for video conversion is not a very smart way of utilizing space on the iphone. can u recommend me some good, preferably free, video conversion software for mac which is smart enough to convert movies (especially avi) to iphone format and also NOT increase the size, if not decrease it!
google gives a lot of results. so thought making a post would help me narrow it down. thankyou.
i have perian installed and also quick time pro.
Neerav

Mpeg Streamclip is nice because of options and its free, but I would use iSquint. Its FREE and it converts in very nice quality, with basic options. Trust me it will cover your converting needs. But if you wanna download vids from Youtube and stuff, I would use mpeg streamclip too. Both together are a nice converint combo. I hope I helped:)?

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