I've been trying several ways to create movies from a set of still images. I find commercial packages to be too expensive for this simple task. Blender does a good job, but I prefer the simplicity (and script-ability) of a command-line tool. At first I tried MEncoder, but I could never find options that would produce a decent result. There were always too many compression artifacts.
What I've settled on is ffmpeg. I use the following command:
ffmpeg -r 30 -b 1800kb -i image%d.jpg movie.avi
The %d is the number of the picture. This seems to produce a decent balance between file size and output quality.