I don't watch videos or movies on my Axim, but I do on my iPod, and after running some tests with some software I found around, I've come to rip the best movies using DVD Decrypter (freeware) to extract the VOB files, then AVS Converter (not freeware) to convert it to mp4 (it can convert to AVI, RAM, SWF, and much more).
I don't know about AVI but the AVS converter has shown much better results and very customizable (size, sound, bitrate, etc...) for the MP4.
If you want to learn how to use DVD decrypter for this job check this tutorial:
http://www.videora.com/en-us/Converter/guides.html
When the part of the conversion arrives, you can use the software of your choice (AVS in my case).
I haven't tried this FairUse that some people are talking about, but this is just one more option for you to try.