Use any one of the following:
WinAVI Video Converter
MainConcept MPEG Encoder
All available on Isohunt.com
Personally I have all 3 showing on Desktop.
I use convertx to easy good $ help if you get into ?
I use Nero Vision Express sometimes, ConvertXtoDVD sometimes. I like them both. I've tried WinAVI and it just wouldn't work on my system. TMPGEnc is a very complicated program with many advanced settings for the experienced user.
The Nero Vision Express, like thetrekhippy said is quite good. I find some other programs that converts avi to dvd, are actually not converting to dvd quality standards.
convert x to dvd great program
convertxdvd is the one i use never had any problems with it