I'll just copy paste what I said in another converting thread.
Check my videos if you wanna see the quality.I use Xilisoft Video Converter Ultimate 6 trial (don't really need the full version as it is for like longer than 3 min clips), I convert using the HD - MPEG2-PS Video profile, and I also always put on 150% volume in the Audio Codec and Video/Audio quality on high in Basic Settings.
Works wonders with Sony Vegas and come out very crisp quality if you have correct Vegas rendering settings as well.
If you want me vegas settings as well.. I think I have it stored somewhere in my youtube outbox.