I always capture to an AVI file – or convert to a DV tape then capture that (so you can batch capture at a later date for the next re-edit).
Trying to find a program that works and then the time it takes to convert the VOB to anything useful, you might as well just capture to AVI.
Seems most of the ripping software goes to MPEG4, DIVX or some other intermediary format as most of the software is designed to let you rip movies to CD or your hard drive.