I prefer xvid, if you know what your doing, you can get encodes that look almost as good as dvd and still fit the whole movie on a single cd. Also every stand-alone player I have had will play xvid.. not so lucky with H264. I also like the fact that xvid is open-source, although I'm not sure if H264 is or not. For short, xvid works great for me as far as quality and compatibility I see no reason to use anything else.