Formatting Video for the iPhone/iPod Touch?

    hey guys, got my ipod touch a couple of days ago and downloaded a couple of programs that supposedly optimize video for the device (Videora and Xilisoft iPhone Converter).

    Why do both programs create output files bigger than the originals?

    I thought that the small screen of the iphone/itouch would mean you would be able to make video files smaller whilst still retaining reasonable quality.

    Has anyone got any other software reccomendations to optimise videos on these?

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