Engadget has published a new howto to learn you how to get DVD video to the new iPod with video capabilities.
This process may take quite a bit of time and disk space depending on the quality and length of the video. Next launch Xilisoft Video Converter and choose “File > Add”. Navigate to the .avi file you just created with DVDx 2.3. Now on the bottom left of the window choose “QuickTime Format (*.mov)”. Choose a destination for the file you will create. Lastly, change the video size in the right hand column to 320x240 and click the “Encode” button.