Here's how I do it. This can probably be streamlined some more but this isn't too hard and does a great job.
Step 1 (if necessary): Sometimes it's helpful or necessary to rip the DVD files to disk first. Mac The Ripper
does a terrific job. The files will go into a directory on your hard drive but will still be in the native DVD format.
Step 2: Convert the DVD chapter(s) to MP4. Use Handbrake
. You can either point it to your DVD drive or you can point it to the directory you created in the first step.
Step 3: Add the MP4 to iTunes and synch your iPod.
If any of this requires more explanation, please feel free to ask.