Capturing video is usually in the Type-2 or type-1 DV format which runs about 13 Gigs per hour of footage and is transferred via Firewire. Some cameras record in MPEG mode and transfer via a USB cable. the MPEG modes vary due to compression levels and or bit rates.
What is the software that you use to capture with? if it is WMM, then it captures via type-1 (Audio and Video streams are bundled together). There are some rudimentary templates available in the software and there are even some more available on third party websites. I have found that the Windows Media 9 codec provides the smallest file size to the highest quality ratio... use a 32Khz sample rate with a CBR of 359kbps for the audio. The video windows of xtube are at a resolution of 320 x 240 pixels, so it doesn't make any sense to render the video any larger... use a bit rate of 302 kbps for the video if you want to really compress the shit out of it with a minimum loss of quality (xtube will then convert it again to a flash format with an even lower bit rate and audio at a sample rate of probably 22Khz which is much more compressed than your original wmv).
It's all about the templates... I use Corel's Videostudio 11 Plus for all of my conversion needs... I have Adobe Premier pro, but it is no more effective at re-compressing video than Corel's $100 program.
Good Luck!!!