I've just installed the lastest version of mencoder/ffmpeg and was doing a few tests

i notice if you set a scale your videos are much better quaility with mencoder...even compared to higher resolution vids.

for example look at the screen shot below



The orginal video is a 720x576 WMV file, The FLV on the left of the picture is using the scale command to reduce the video resolution to 426x330 and the FLV on the right is not using the scale command and still in its 720x576 resolotion.

as you can see in the pictures the fence on the left and things in the distance are much better in the scaled image on the left....I would have thought the higher resolution one on the right would be better quality but its not.

If you want to add a scale to your mencoder converting command open /include/settings/video_conversion.php
and if your using the newer version of mencoder add:
Code:
-vf scale=426:330
if your using an older version of mencoder add:
Code:
-vop scale=426:330
change the scale value to what ever your flv player size is.