Handbrake will convert it to

Handbrake will convert it to mp4, with great resolution – depending on your settings in Handbrake. You get to set the video quality in HB to determine the render settings high quality / low quality – you decide). But, if the resolution is bad in the original footage – there’s not much you can do to improve it. Try HB to see if you can get the mp4 you want.

About codecs:
http://netforbeginners.about.com/od/multimedia/f/codec.htm