I just wanted to pass on this MacWorld article about converting videos for use on both Apple TV and iPods:
Encoding Video for Apple TV and iPod
The article does a good job of explaining the best ways to encode one video for use with both iPods and Apple TV:
In order to do this you must encode for the lowest common denominator, which, in this case, is the 5G iPod. That iPod will accept H.264-encoded files at a resolution of up to 640 x 480, with a maximum bitrate of 1,500kbps, and up to 30fps. That video’s audio track supports AAC-LC with a maximum bitrate of 160Kbps, stereo, and a sample rate up to 48kHz.
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