Video Encoding Software Help

i have a Dazzle DVC 150b and i use it to back-up all my vhs tapes and the software it came with is Pinnacle's Studio Quickstart which is a good program but a few videos i'd like to encode for the web and while Pinnacle does a decent job i'd like to have something that will do 720x480 at a smaller file size, an example is, a video at 49 minutes 720x480 is 500MBs, at 320x240 it is 160MBs or so..anything out there that may help.? by the way, if anyone out there is considering something to archive VHS/composite and DV video i highly recommend Dazzle DVC 150b.

 

You know that different codecs will also "shink" the file size down... with some loss in quality. The most popular (for a while) has been divx.
What compression are you currently using?