with those high res DV cams, you might want to stay up there in the quality chain and go for DVD quality (MPEG2), xvid/divx is for highly compressed stuff, yes you can use very high bit rates, but its so much easier to burn to a dvd using mpeg2, and it retains a very good amount of quality, your cam mustve come with some software for that?
What applications are you using at the moment?