If you simply hit the “Show Presets” it’ll show you EXACTLY what you’re looking for.
A couple things to note…
#1.) When you hit “Show Presets” it will literally pop the menu right out of your (regular, not wide) screen’s view. So then drag handbrake’s window over so you can actually SEE the presets.
#2.) Don’t bother setting the aspect ratio yourself, just select “ipod/iphone” as the preset…BUT…if you want the best looking movie, click in the lower section of handbrake under “video” and select the “2nd pass” option. (It is not already selected)
#3.) When you’re done…you CANNOT drag/drop the movie in yourself, but you can drag/drop the movie into the playlist…so do that, then when you click back in your iPod and select the “Movies” tab for your ipod, it’ll show that particular movie. Then you can sync everything, or select just that movie & sync the movie. (Obviously click apply down at the bottom to do so 'cuz sometimes iTunes says “sync” and sometimes it says “apply”.)
btw this is how I did it for my IPod when that issue came up but for ITouch, I assume it’s basically the same way of hooking it up to ITunes and letting it find the device and such, click and drag etc no?