Fast Free Video Converter

Anything that has FFMpeg or FFMbc as its base will do what you want.

However, the longer you allow a computer to crunch the video, the better quality you will get.
 
Plus one for FREEMAKE as long as it has what you need otherwise HANDBRAKE is a good doitall solution......
 
Another vote for Handbrake. It's very well designed - easy to use for a newcomer, whilst also offering more intricate options if you choose to head that way, if you're seeking the Ultimate Compression™. Importantly (for me =:) it's cross-platform, too, so it's a happy bunny under OS X, Linux, and Windows.
 
Format Factory is my preferred application for such tasks.
 
If you are going to be recoding more than once in a blue moon, it may be worth looking into the command line encoders - like ffmpeg - and (learning how to) scripting a solution. This is what I do for my recodes.
 
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