I don't use FormatFactory, but this is a common question.
In general - H.264 is a good, general purpose, motion optimized codec, supported on nearly everything.
Resolution should depend on the source and how you'll be using the movie. Preserve the aspect ratio and it's a cinema format and you don't care for the black bars, just zoom when viewing.
DVD and many sources, you'll get along fine with a max resolution of 480p (what they started with). Even if the movie started as HD - if your target is viewing on your phone, then 480p is fine - if you want to use AllShare (DLNA) then shipping video over the net will probably be easier with 480p.
If you're looking to preserve HD content, then 720p is your best bet.
On FormatFactory, you want to select the MP4 file type, start there.
PS - Welcome to the forum!