Any-video-converter sucked for me. After 5 or 6 waste of time download/install/uninstalls, on assorted, free-looking converters, I had some good success with MediaCoder. I'm not actually converting for iPod Touch but the software is free and had quite a few options I haven't had the time to play around with yet. But I was able to enjoy watching media on my phone today successfully because of MediaCoder.
I also liked that is used all 6 of my cores. Nice to see my CPU at 100%!