Where do you want to view the video from, DVD, hard drive (computer/TV), portable media player, YouTube?
AVI is just the container for the video file, you can choose most any codec you want with any resolution and compression level and have it named “.avi” It just needs to be compatible with your playback device.
MPeg4
DivX
Xvid
H.263
H.264 (MP4)
DV
huffYUV
M-JPG
to name a few.
MP4 at 200mb for 6 minutes of footage equals 4gb for a 2 hour movie. Sounds like a good choice or you can use DivX or Xvid.
hope this helps
Steve