I've used many but have to parrot the previous recommendation from jodypress. "Freemake converter" is the one I'm happiest with. There's lots of tweeks. Good Luck!
That's so odd, I don't even have my Transformer yet but was just doing research on this five mins ago. Here is the link to the XDA forum I was reading about with preset Handbrake settings. I've been using Handbrake for a while and it does a great job for the low low cost of free.
Foxreal video converter is specially designed based on Nvidia CUDA technology, if you use Nvidia video card, the conversion speed will much faster
you may use h.264 mp4, this format is liked by almost all the android devices. below is a preset for transformer supplied by foxreal video converter, for your reference