DivX offers fair image quality and high compression ratios. Make certain you download the standard version of DivX; the Pro version is ~$20, and the free version of Pro is laden with spyware. The only differences between DivX Standard and DivX Pro are some additional compression options (and the Pro version for Macintosh is now bundled with an MP3 encoder).

You can also try converting your AVI videos to MPEG-1 format with TMPGEnc.