Anything over 720p for viewing on your phone would be overkill, since the screen is 720p. Anything over 2.0 audio would be overkill since the phone doesn't have surround sound. I also would argue that a higher bit rates probably won't be beneficial due to the size of the screen.
All of that goes out the window if you plan on plugging it into a larger HD screen.
That said, I have a blu-ray that I did a quick encode of as a test the other day. I encoded to DVD5 size at 720p leaving surround sound.
My output looks like this according to media info:
Code:
Duration : 1h 46mn
Bit rate mode : Variable
Bit rate : 4 439 Kbps
Maximum bit rate : 20.0 Mbps
Width : 1 280 pixels
Height : 720 pixels
Display aspect ratio : 16:9
Frame rate : 23.976 fps
Color space : YUV
Chroma subsampling : 4:2:0
Bit depth : 8 bits
Scan type : Progressive
Bits/(Pixel*Frame) : 0.201
Stream size : 3.30 GiB (87%)
Audio
Format : AC-3
Duration : 1h 46mn
Bit rate mode : Constant
Bit rate : 448 Kbps
Channel(s) : 6 channels
Channel positions : Front: L C R, Side: L R, LFE
Sampling rate : 48.0 KHz
Bit depth : 16 bits
Compression mode : Lossy
Stream size : 341 MiB (9%)
It played fine in my test, I didn't watch the entire movie though. I played a minute or so in the beginning, skipped to the middle to a scene that had a higher bit rate and that played fine as well.
YMMV though.