Divx seems to be the preferred codec. Problem is, you can't fit all that much high quality video on a CD. I recorded a 2 hour show off of TV with my WinTV-PVR card. I removed the commercials, trimming it down to 88 minutes.
I compressed it using Vidomi, and 2-pass Encoding with Divx, first pass to 4000bps, second to 2000kbps. (yes, there is a point to this description) I also reduced the video to 480x358 pixels; and it's in Stereo sound, 128kbps MP3. Well anyway, those 88 minutes would require 2 CD's.
If you compress it too far, you get lots of funky compression artifacts. If the actual video size is reduced too far, then it gets fuzzy. And doing both will result in just plain bad video.
Using a lower bitrate for the audio, and mono sound would save a little space, but not really enough to matter.
So really, the only ways to get those tapes onto optical discs is either to use a good number of CD-R's, higher compression ratios (low quality), or get a DVD writer. With a DVD writer, you go from about 0.63GB to 4.7GB - you can fit much higher bitrate files on, with better audio quality. True, you can't have "DVD-quality" as the original isn't, but you can fit more tape per disc.