H.264 is far superior but it's new and right now is only supported in 480p formats. The older MPEG4 format is your 720p option.
Try it both ways - right now, I'm preferring H.264/480 over MPEG4/720.
H.263 is actually a _simple_ videoconferencing codec, but it's included if you want to take more memory-efficient recordings at the expense of quality.
These are all shorthand names for video compression schemes (_ALL_ digital video is compressed, by definition).
MPEG is a standards body -
Moving Picture Experts Group - Wikipedia, the free encyclopedia
MPEG4 is really MPEG4 Part 2, while H.264 is essentially MPEG4 Part 10 - it's a motion optimized scheme - and __likely__ to play on a wider range of devices and PCs without adding software or performing conversions.