Mac 911: Encoding video for Apple TV and iPod: "You know how to encode video for the Apple TV. How about one encoding setting for the Apple TV and the iPod?"
In order to do this you must encode for the lowest common denominator, which, in this case, is the 5G iPod. That iPod will accept H.264-encoded files at a resolution of up to 640 x 480, with a maximum bitrate of 1,500kbps, and up to 30fps. That video’s audio track supports AAC-LC with a maximum bitrate of 160Kbps, stereo, and a sample rate up to 48kHz.