I use WinX and that supports the new iPad 3, another decent one is Aiseesoft which handles blu-rays.. but not free, however their prices are very low, I use their converters too, for handling HD m2ts files from my Panasonic 3mos SD600 camcorder. (look superb on iPad)
On the subject of the black bars top and bottom, WinX automatically crops them out...(You have manual options too of course) it does'nt affect the aspect size of the end picture you will see, it appears exactly the same as one that has not had the bars cropped out, but you do end up with a smaller file size.
Why would you want to keep the bars, as part of the picture when you convert.. doesn't make sense... bit like having a sheet of A4 paper where the top and bottom 2" are blank, if you cut off those 2" blank strips from your sheet of paper the picture is still the same size... but your piece of paper is smaller.
There is another more important reason for cropping the blank area, and that is... have you ever wondered why some films you have ripped don't always have the expand/zoom option showing on top right of your iPads screen when playing back a movie ?, where the iPad opens up the picture to fill the iPads screen more.
The answer is simple... when there is excess bars top and bottom the iPad cannot handle them properly, and instead removes the expand icon... I have proven this by ripping with the bars, and also ripping without the bars. If you do a google search on this, you will find evidence that supports this. The black bars do not affect the end picture on the iPad, but they can affect final file size, and also whether you get the playback expand/zoom screen option.
The iPad as you all know is 4x3 ratio, which means for all films except some older ones you are going to have bars top and bottom to some extent, the standard widescreen is 16/9 or 1.78:1 or 1.85:1, which play back well on the iPads screen, and will generally come close to filling the iPads screen if one chooses to use the iPads zoom option albeit with losing part of the picture from the sides.. as mentioned in posts above...nothing comes without cost in this world..lol
When buying DVD films, which I think I may put on the iPad, I try and avoid the films with 2.40:1 or 2.45:1 aspect ratio, which are the widescreen cinema versions, and as you know look very narrow indeed across TV's and even worse of course on Ipads. Unfortunately a lot of the later modern films are released with this aspect ratio, but sometimes they release two aspect ratio versions of the same film. The old classic Ben Hur film for example is avaiable on DVD with it's original 4/3 ratio, but is also available on widescreen format... so always worth checking the aspect ratio if your putting it onto your iPad.
(We know the ripping software can output to specific sizes, but it helps enormously if the source material is nearer the aspect ratio we want to start with)
I would say, this is one area where the wider screens of some of the better Adroid Tablets score over the iPad, shame their quality is not so good. Personally it doesn't bother me too much, maybe in future models a more rectangular shape is on the cards.