Are you using 3GP? If so then use the varible BitRate option instead, they're the ones that have QVB, they all use 29fps but only use high BitRates for frames with lot of movment in them. I've converted a 1.1Gb .avi (1h 40min film) into an mp4 that's only 279Mb and the picture quality is amazing.
This way you can enjoy smooth films without eating all your memory stick up and it should sort the sound thing out too.
If you've not got 3GP then sorry for wasting your time explaining!
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