I have been using Handbrake to re-encode my videos when I want to watch them on my HTC Incredible Droid.
These are the settings being published on the Android forums:
HTC Incredible Settings for Handbrake:
Container: MP4
[Picture]
Width: 800
Keep Aspect Ratio: Checked
Anamorphic: None
Cropping: Automatic
[Video Filters]
All off all unchecked
[Video]
Video Codec: H.264 (x264)
Framerate (FPS): same as source
2-Pass Encoding: unchecked
Avg Bitrate (kbps): 1500 (may change this on next encode)
[Audio]
Source: Select your language
Audio Codec: AAC (faac)
Mixdown: Automatic
Samplerate: Auto
Bitrate: 160
DRC: 0