HandBrake is an open-source, GPL-licensed, multiplatform, multithreaded DVD to MPEG-4 converter, available for MacOS X, Linux and Windows. MP4 with AAC audio or AVC with h264 video and AAC audio. It also lets you crop the image to get rid of the black bars to bring down the size even more and lets you choose options as to how you want it encoded.

Supported sources:

• Any DVD-like source: VIDEO_TS folder, DVD image or real DVD (unencrypted--protection methods including CSS are not supported internally and must be handled externally with third-party software and libraries), and some .VOB and .TS files
• Most any multimedia file it can get libavformat to read and libavcodec to decode.

Outputs:

• File format: MP4 and MKV
• Video: MPEG-4, H.264, or Theora
• Audio: AAC, CoreAudio AAC (OS X Only), MP3, or Vorbis. AC-3 pass-through, DTS pass-thorugh (MKV only)

Misc features:

• Chapter selection
• Subtitles
• Integrated bitrate calculator
• Picture deinterlacing, cropping and scaling
• Live Video Preivew