The output would mainly be consumed on Windows client. The workhorse I can use is a virtual Debian Etch on XenServer 5.0. I tried the ffmpeg installation from Etch native repository. It worked fine but it can only use FMP4 for default video codec. Windows Media Player / MPC just didn't play the video on my Vista x64 with Klite installed. I was searching for a solution. Some suggested configure ffdshow to support FMP4, which it already did ("other MP4" enabled). Some suggested changing the 4CC of the file, which looks like too much work. As I was fudging along, I wanted to double check what error message WMP had, if any. But this time it played! Weird. All I did was checking the ffdshow config and using G-Spot on the file...
Anyway, this is all too unreliable. I gotta produce xvid AVIs. So I chose to use debian-multimedia.org. Pretty easy to use. After I added the repo to sources.list, updated, ffmpeg is ready with xvid. The syntax that worked for me is just
ffmpeg -y -i VTS_01_1.VOB -vcodec xvid -b 1000000 -f avi my.avi
For multiple VOBs, it'd be a simple concatenation:
cat VTS_01_0.VOB VTS_01_1.VOB VTS_01_2.VOB | ffmpeg -y -i - -vcodec xvid -b 1000000 -f avi my.avi