Video conversion is typically a real pain in the arse. Here's a very quick recommendation for some free software that will convert your videos to MP4.
I'm using Jodix to convert video that I want to upload to YouTube. Obviously, you can also play MP4s on your iPod, so it's good for that too.
It seems to pretty much do what it says in the tin.
So far all I'm converting is MPEG2 4:3 aspect ratio video, and for this it works a treat.
HOWEVER, IT DOESN'T WORK WITH DIFFERENT ASPECT RATIOS. They convert, but play back as if 4:3.
If your needs are old school then this tool is up to the job...