To be honest, I know this is an old post, but I'm putting it here for that one person who will do a search and see the title and expect an answer!
I have been podcasting for well over a year and I can tell you that the best format is MP4. It looks the best, and it is small. Encoding can be tricky though.
I used to use Media Coder.
It is a free project. and has a batch feature which is real nice.
The other reason I use MP4 is because it is best for iTunes.
I did have a codec problem as of late and have not been able to get it fixed, so Media Coder broke for me.
now I am stuck encoding all my podcast videos with Camtasia Studio, which only lets you do MP4s in the ever popular iPod screen size! Yuck.