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I also use DVD Catalyst 3.0 It works very well, but don't make the bit rate too high, or the video and audio will not match up. It will look like a bad Japanese translated movie
The Droid does not support .avi format. So you need to convert to mp4 or another format. I use Audialsone to convert my videos/music. I paid for it awhile back and it works great.
if you're talking about dvd cat. you can use the iphone setting, but because our screen is twice the resolution, the picture will be half the size. really, for $10 it's well worth it.