VirtualDub -
www.virtualdub.org - is an excellent free program that will let you do those things and loads more. You just need to choose what codec you want to use (DivX, Xvid etc).
I will warn you though - It's not the most user friendly software I've ever seen.
If you're happy with Windows Media Video (WMV files) then you can go to the Microsoft website and download Windows Media Encoder for free as well, which is ok for compression.
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