I have gotten the best results from Handbrake. If you want movies that look very good, but are less that half as big as those produced using Handbrake's iPhone preset, start with the iPhone preset, but then change the following settings:
On the "Video" tab:
1) Click on "Average bitrate (kbps)", and set it to 450.
2) Put a check in the "2-pass encoding" box.
3) Put a check in thee "Turbo first pass" box.
From the "Presets" menu:
4) Select "New Preset..."
5) Enter the name you want to use for this new preset. (I used "Pre 450")
6) Select "Current" from the "Use Picture Size:" pull-don menu.
7) Add a description, if you want.
Click the "add" button.
To save time, you can set this new preset as your default by choosing "Select Default Preset" from the "Presets" menu.
That is it! Try it out for yourself. If it does not look good enough for you, just bump up the bit rate to something like 500Kbps. My tests showed only a marginal increase in quality going from 450kbps to 500kbps. The 2-pass encoding takes much longer, but the result looks better that single-pass encoding at the same data rate. You are trading a one-time longer encoding process for the ability to pack twice as many movies into your Pre!