max res h264 for mms video since it's the most effecient codec by 20 miles
640*480 mpeg-4 for recording anything else.
http://www.youtube.com/watch?v=K5bX8IEgz7s
pretty decent video for any cellphone regardless of make or mp count. still think my 3 year old 3mp LG Dare took far better video & pictures tho. hell fwiw it's video is still better than 8mp incredible. i digress... its more than useable video.
the "blockyness" on mpeg-4 640*480 video comes from low bitrate. not worth telling you to save to internal memory or buy a better micro sd card.