HandBrake is an open-source, GPL-licensed, multiplatform, multithreaded video transcoder, available for MacOS X, Linux and Windows.

Supported Sources:

Any DVD-like source: VIDEO_TS folder, DVD image or real DVD (unencrypted--protection methods including CSS are not supported internally and must be handled externally with third-party software and libraries), and some .VOB and .TS files
Most any multimedia file it can get libavformat to read and libavcodec to decode.

Outputs:

File format: MP4 and MKV
Video: MPEG-4, H.264, or Theora
Audio: AAC, CoreAudio AAC (OS X Only), MP3, or Vorbis. AC-3 pass-through, DTS pass-thorugh (MKV only)

Misc features:

Chapter selection
Subtitles
Integrated bitrate calculator
Picture deinterlacing, cropping and scaling
Live Video Preview