I've standardized on MPEG-1, about 850MB file size since before DVD-R days, when CD-R was the only reasonable writable media. Almost all movies are adequately viewed on laptops at that level of compression and it is VCD compatible, so you can burn a CD-R and play it on most DVD players. These same 850MB files occupy much less space than a DVD rip of 4-8GB and so, for example, my netbook with 160GB disk will hold 100+ movies with room to spare.
At home a 1.5TB drive on a fileserver holds many such movies, and they can be d/l into the iPad, e.g. using FTP, or HTTP-streamed for instant viewing on the iPad, or streamed over the Internet (instead of the local net), for remote viewing as well, as long as the iPad gets a decent connection. Orb can also be used to serve these files up, but that is unnecessary...
For smaller format devices, I down transcode to QVGA (320x240), and the file size goes down to 200-300MB. A 8GB uSD card hold many of these for viewing on my WM devices. But QVGA is a little too crummy for iPad viewing...