I have the S3 IS myself... I'm still amazed at how good the damned thing can be - the video recorded with it is comparable with my Digital8 footage.
For less pretentious work (no added visual elements, just straight compression to MPEG2) try TMPGEnc Xpress 4.0, which also does an excellent job.
Since I'm looking for maximum compatibility and minimum of hassle, I usually convert all my video footage to MPEG2 and create nice DVDs with it (while adding transitions, visual elements such as captions or pop-up bubbles etc.)
The advantage of using DVDs, beyond their compatibility with virtually any piece of equipment out there (computers, DVD players etc.) also comes from the cheap prices and availability of good storage media. I also have the possibility of creating menus, chapters and other goodies, which are great for navigation.
I make all my conversions with Ulead VideoStudio 10 (with the added bonus of being able to create a very convincing 5.1 DD track from the original 2.0 audio)... You can also use Sony Vegas, another excellent piece of software.
Both Vegas and Ulead currently use the MainConcept MPEG encoding engine, one of the most established names in the field.
Since the Canon S series records video at 640x480, which is a bit less than the regular NTSC 720x540, when you're converting to DVD you're doing a bit of upscaling, but don't worry, you won't be creating unpleasant anti-aliasing artifacts. A good encoder will do the job flawlessly, and you'll end up with a video file indistinguishable from the original - I have a 37" LCD monitor, and I can't tell the difference... BTW, for MPEG2 you should *always* use 2-pass encoding!
Use the free bitrate calculator from
www.videohelp.com, in order to figure out what bitrate you want to use (depending on the length of the final video)
It's also a good idea to bookmark
www.videohelp.com, and refer to it regularly, since it's probably the best video site on the Web.