Hello Flanker!
well, I can offer three strategies on editing video files:
1) I do own an Archos 504 PMP and to convert videos for use on that baby, I use a software called PocketDivXEncoder;
this one is able to resize, change the volume, encode in XVid, cut etc.
its great for basic conversion of for example AVI files to XVid for use on the Archos.
problem is, you cannot really fully edit a video, meaning cutting out sequences like commercials or stuff;
what it can do is cut off pieces at the end, somewhere in the middle or at the end ONCE;
basically you tell it what you want it to do to the video file and then it converts the video to that end, but you can cut pieces only once, so for several sequences to cut out, you would have to run it several times..
2) VirtualDub is great for fully editing avi files; you can mark what you want to have deleted and simply delete it then;
you only need to recode the whole avi stream afterwards but you can compress it with whatever codec you want to apply to it, both video (DivX, XVid, etc.) and audio (mp3, etc.)
problem here is, after you have edited an avi file, you need to recode the resulting rest again, this takes quite some time;
3) and this is the expensive solution: Sony Vegas
I do use this very very seldom, as it is a little bit more complicated (to say the least) than VirtualDub, and for my needs, the PocketDivXEncoder usually is sufficient, but Vegas is a powerful editing software that can do virtually everything to a video-I would say what Photoshop is for editing Digital photos, Vegas is for editing digital videos.
the advantage is that when you cut a piece from the avi file in Vegas, you do not need to recode the rest-you simply cut out commercials and save the rest as an avi file-its as simple as that.
plus you can mark in milliseconds IIRC, so positioning your cut markers is very very precise.
but as said, it is expensive.
for your needs, I would stick to VirtualDub, or, should you have Nero Burning Rom, there is a module that can basic-edit videos too IIRC.
I hope this helps, should you need some more tips regarding VirtualDub, do not hesitate to ask

cheers
BL