MediaFork (released Monday, sequel to HandBrake, $0)
VisualHub (big brother to iSquint, $23)
These are GUI's for ffmpegX. They work well for me.
(Search any Mac shareware site, e.g. MacUpdate.com, VersionTracker.com, etc.)
An H.264 640x480 iPod-compatible encode must have a few new characteristics: Baseline Low-Complexity Profile, a new Apple uuid atom, width no greater than 640, and perhaps a couple other things. See:
http://lists.mplayerhq.hu/pipermail/ffmpeg-devel/2006-September/045391.html