I'm looking for ideas on how to store Ripped TV Shows.

Currently they sit in MPEG2 Format at 480x480@~30FPS

I'd like to keep 480x480, but I'm not sure what is the best way to store them as... XViD, DiVX, MP3, AC3, etc, What bitrates to use and what other options...

The quality is TV Cable Quality (a little better than an Antenna)

I'm using mencoder for this stage. I'm beginning to run out of space and MPEG2 on DVD isn't good for space when 10 could sit on the same DVD in XViD format vs 2 in MPEG2 =/

DIVX/XVID is a good choice, as it's a variation on MPEG4 and has really good quality for it's file size. You might also look into Ogg Theora or Matrovska, which are newer Free formats, but in my experience they tend to be a bit flakier to use correctly and are less supported by various systems. Another idea would be to keep them in MPEG2, but cut them down to a smaller bitrate. They'll still be bigger than XVID files would be, but they'd be easily portable and might even be playable in some DVD players directly from a DVD-R. You'd probably have to experiment to see how low you could go and still have a decent quality picture.

If sound quality is important to you and the source recording is good, use AC3, otherwise MP2/MP3 will save you a few megabytes. You can also adjust the bitrate for more savings. I'm personally of the opinion that sound isn't that important for most TV recordings, so 128bps mp3 is usually good enough for my ears.

As you seem to have discovered, when you get into video encoding, there are a lot of options available and a lot of trade-offs to choose from. File size/quality being the biggest. In the end you'll just have to experiment and make your own decisions as to what's best for you.

As for me, I personally prefer to create video DVD's from my recorded files, complete with menus, so I can watch them on my TV while doing other things on my PC. I can usually get about 4-5 hours of watchable quality video on one disk, which to me is a pretty good compromise.

Thanks for your post =) -- I didn't think of scaling down MPEG2 by lowering the bitrate (I use MPEG2 as it's easier for me to edit)

Currently the quality of video and sound is "so so"
Picture is kind of fuzzy and sound is "ok"
(Cable in my area isn't that good)

Does anyone have any suggested bitrates for "so so" quality?
At the moment I'm leaning towards XViD as the Codec installer is nicer than DiVX and it's OpenSource... (I'll investigate MPEG2 with reduced format - last time, mencoder didn't like mpeg (my source is from another application and machine)