Have you tried Studio? I've got mp4 file making in S11, but I don't know if that's because I paid for mp4 in s9. However, I'm pretty certain mp4 is free with S12.
You will probably have to use a custom preset to fit the Ipod touch screen.
The only issue you will have is ripping comercial DVDs with copy protection. There is a very simple answer to that - use a decrypter program to rip the DVD to a TS-Image and then import that into Studio with the Import DVD titles. In most countries this is deemed illegal, even though you've already paid for the DVD and simply wish to watch it on another playback mechanism. I'll let you make the moral decision as whether you should download DVD Shrink.
If Studio won't do the job for you, the free conversion program I use is Super C.