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Yes! The more you compress video the more quality you lose.
However, there are good encoders out there that do a better job than others do so that can make a difference.
Another thing is that sometimes it can be hard to notice with your own eyes if there was any loss of quality or not. In other words if I took an hour video and compressed it using 5000bps versus 7000bps, you might not be able to tell the difference too much. If there was a difference it would show up in fast action scenes in which you would most likely start to see some artifacting (blocking) going on with the 5000bps encoded video.
You can squeeze or compress 2 hours of video onto a regular size DVD but you will for sure notice a difference in the quality of the video.