Hi, I also have a 30Gb 5G and had the same questions.
For converting, I use ffmpeg. I came across a little script, and I can't find the site to give the proper credit--anyway, it's the video2ipod guys.
#Description: video2ipod converts video to iPod format
#Usage: v2i origin.avi output (it will add .mp4 by itself) (The origin can be avi, mpg, mov...)
#cp /home/_your name_/path_to/v2i /usr/local/bin/v2i
#chmod a+x /usr/local/bin/v2i
#4:3 aspect uses
#16:9 aspect uses
ffmpeg -i "$1" -f mp4 -vcodec mpeg4 -maxrate 1000 -b 700 -qmin 3 -qmax 5 -bufsize 4096 -g 300 -acodec aac -ar 44100 -ab 192 -s 480×270 -aspect 16:9 $2.mp4
Paste this into a text file without a suffix, I called it v2i because it's short and not already used by linux.
The comments #cp... and #chmod... are the commands to use to get it to be a command.
From there, you can follow the usage instructions the video2ipod guys provided.
Just modify the -aspect and -s values in your /home/_your name_/path_to/v2i file as needed (I added some comments with the values that work for me for TV out from iPod--then redo the cp.. and chmod.. bit to update your command file). It's pretty fast, comparable to Jodix's converter and the one that starts with V--Videora or something. I get error messages sometimes during conversion that do nothing harmful, but sometimes I use ugly source. There seems to be a correlation. It doesn't stop the conversion, though some frames might be skipped--I haven't noticed. A full length movie takes me about 45minutes, but that can probably be tweaked with quality settings depending on your output needs. For that, I have to defer to FFMPEG's wiki page.
For the transfer, I use gtkpod.
The results are decent, depends on the source. There's usually some blocky pixels when you go out to TV; in dimly lit scenes or where there's an expanse of a pattern, but hardly noticeable on the iPod's screen.
...and this site seems more informative than my post, sorry for putting it at the end-just found it: