If you are a bit geeky like me, you have plenty of video files sitting around that you want to encode for the little one's use. I have used the following to convert Youtube videos, DVR files, and random video. If you use Windows, go get the 32bit static binary of FFMpeg from the link below. Then modify the following string with your source input and output video. This will create a good looking video in the AVI/MPEG4 format that looks great on the screen. This is totally free and has lots of options.
http://ffmpeg.zeranoe.com/builds/
ffmpeg.exe -y -i "c:\Your\Input\Video\path.mp4" -c:v mpeg4 -vtag DIVX -q:v 6 -filter:v scale=720:-1 -r 30 -c:a libmp3lame -ar 48000 -ab 128k -ac 2 -async 48000 -threads 8 "c:\Your\Output\Video\Path.avi"