Just ran a test on MPlayer and Super.
The first 10 minutes of the same movie, ripped/encoded 3 times:
1. Super with recommeded 3GP settings. Output file size: 16,679 kb. Quality score: 75%. A little grainy. Acceptable but not great.
2. Super with recommeded AVI settings. Output file size: 19,787 kb. Quality score: 80%. Slightly less grainy than 3GP. Acceptable.
3. Mplayer encoder with Zro's recommended settings. Output file size: 22,880 kb. Quality score: 95%. Larger screen size. Only a bit more color depth would make this encoder perfect. Best in class.
In all 3 cases, sound and video were a perfect match.
Remember, these file sizes are for 10 minutes of a movie.
Doing the math... for storing more than one full-length movie on a 1GB card, assuming you want to leave space for plenty of songs, you'd need to decide whether to encode 2-3 excellent movies with MPlayer, or 3-4 acceptable movies with Super.
Storage v/s material quality... hmm...
Here's hoping they release the fix for the 2GB card soon!