With audio and video,your system and display are also a part of the chain apart from your perception. Satiation levels vary from individual to individual.
Yep, try out the various suggestions and choose the one that fits your bill, taking into account the file size which is your primary concern.
An easy to use converter with which you can try out is Freemake Video Converter. To AVI
can make Xvid in TV quality (of course you may have to migrate to H264 if you want DVD quality and in that case you choose To MP4
) You may use custom presets and tailor it to get a file size acceptable to you. Nothing like trying out to get the best fit. (for you)