I would also recommend that, but I hardly think h.264 is more portable. Perhaps in the future, but it seems to me that there are more devices that play DivX/XviD. At least, there are in my home (where an informal count reveals 6:2 in xvid's favor).

Although I guess if you live in an Apple environment, then yes, there are more ways to play h.264 files, but you'd better make sure they're encoded juuust right. I've tried encoding video for my parents' AppleTV a couple dozen times now, using several different programs and various video settings, and none of them work properly. Argh. I apologize, as you can see I'm a little biased against h.264. I still think it's not as common as xvid though. Not yet, at least.

And again, on Windows I have had no luck with Handbrake on two different machines. It looks like a great program if you have a Mac.