I use Virtual Dub. It may not be your cup of tea since you have to learn how to run it. I don't offer lessons on it but it's what I use and the price is free.
There is one issue and that you have a .VOB file which is a DVD encoded file. You may have to convert that to AVI first. I think I looked up VOB2AVI on google.com for a tool last time.
I have some tidy little software that can resize clips I've taken wiht my camera from 640x480 to 320x240 quite splendidly. But I'm afraid to try out a whole movie on it with 4 gbs of VOB quality. What I'd like to do is take movies I've ripped to my hard drive (don't worry I own them too) and be able to convert them down to the 320x240 size for viewing on my pda. I have plenty of storage on it so no worries there either. It is a Dell Axim x51 and has Windows Media Player if that makes a difference in your recommendation, thanks.