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XviD/DivX is probably the best for this - pretty much everyone supports this, and you don't need to purchase extra software. Quality's decent, and filesizes are reasonable... and with our Axims, there's hardware acceleration of the decoding. Probably 320x240's the safest 'size' for encoding; any higher and non-VGA devices will have a fit, and any lower and the video quality'll suffer.
If you want to be REALLY conservative, you could go 240x240 for the square-screen people...
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