I have a great solution that can cut your DVD movies down as small as 600 megs and still keep very high quality.
http://www.pqdvd.com/index_palm.html
This is what I use, The default settings are actually poor quality, but if you crank the settings up all the way to the highest quality and resolution, you will never go past 600 megs. I like the Palm pilot version as it saves the files as an AVI file and you can play them on your pc. All you do in the program is click the open DVD button and then select your settings and click on Start and away it goes. Makes cool DVD movies for palm pilots too.