I used the iPod (not a typo) preset in Handbrake and set the width to 640. The height was left blank to preserve the aspect ratio.
File size for an average length (1:45-2:00) 16:9 or 2.4:1 aspect movie is typically around 600-750MB.
To me the quality on the iPad screen is very good, the output to the TV is somewhere between standard def TV and DVD, and the file size is reasonable. Hope this helps.