I
love AutoMKV. It's free, works very well, and is being actively developed. It also supports a wide variety of different compression types including:
Container Formats:
AVI
MP4
MKV
WMV
Video Codecs:
XivD
X264
WVC1
Audio Codecs:
neroAAC
LAME
OGG
I've been using it to rip all my DVDs and new media to X264 MKVs. The quality is quite a bit better than what you can get with XviD, at similar bitrates. But, like I said, it can easily handle XviD AVIs as well, and has profiles optimized for Set Top Players (if that's what you're after). The other great thing is that it's being actively developed, and the guy who's writing it is great (almost as responsive as JRiver), though he's Italian and his English is a little spotty.
Another nice thing about it is that it even includes a good DVD Ripper built in (DVD Fab Decrypter Express) and it can handle episodic DVDs easily (you simply select the PGC you want to rip and check two options under Advanced Options).
The other classic option which, for XviD AVI conversions
only, works about perfectly is AutoGK. In fact, buzzqw's (the AutoMKV developer) stated goal is to build a new AutoGK that supports the new codecs and container formats, and provides more configuration options, while staying simple. AutoGK is not being actively developed currently (mainly only showstopper bugfixes and new builds of XviD show up), but if all you want is simple XviD AVI conversion, it'll work perfectly. It does not include a ripper and it does not handle episodic DVDs (it doesn't process the IFOs or PGCs), so you'll need to handle those tasks yourself. AutoGK is available here:
http://www.autogk.me.uk/