Choosing the right codec is important, but its not the only factor you should consider when compressing a video. There are many other areas that you can tweak to get better quality or smaller file sizes.
To make your video look the correct size when played on a computer, for full resolution export your video at 640x480. A 640x480 video on a computer will have the same aspect ratio as a 720x480 video on a television. (Note: Since DV is intended to be viewed on a television, the resolution of DV codecs is fixed at 720x480).
If small file sizes are a must, consider reducing your resolution to 320x240 (or lower). Obviously, you'll want to reduce each dimension by the same amount to keep the proper aspect ratio. A few codecs (such as MPEG-1 and H.263) were designed for lower resolutions and actually have better quality at these resolutions. For example, NTSC MPEG-1 is designed for 352x240. When maximized to full screen on a computer monitor, a 352x240 MPEG-1 file will actually look better than the same video encoded at 640x480, even though the smaller file is being blown up more. (My codec guide will tell you if a codec works best with a particular resolution).
Another time when you might want to crop the video is if the video is letterboxed. There's no point in wasting your bits on those black bars, so with cropping you can easily lop them off and save disk space without losing anything.
Bicubic- The most common method, found in Adobe Premiere and After Effects. Bicubic is good for scaling for as much as twice the size of the original and down to half the size of the original. Anything more or less and blockiness becomes rather noticeable.
Sine- Less common that bicubic. Use sine (if available) for when you greatly want to enlarge or reduce your video (more than 2x), for it performs better than bicubic in extreme cases.
Bilinear- Samples pixels adjancent to the source pixel to determine the output. Old and certainly not the best, but better than nearest neighbor.
Nearest Neighbor- As stated above, the worst scaling algorithm. It simply duplicates the nearest pixel, yielding a very blocky result.
Things are complicated by the fact that not all deinterlacers are created equal. There are various methods for deinterlacing, some creating much better results than others. Some programs give you a choice as to which deinterlacing method to use. Here are some of the most common (the names can vary):
Weave- This method simply combines the two fields into one progressive frame, which leads to the feathering artifacts described above and is thus not good for high-motion video. Weave is good for sources that were originally progressive (such as film), converted to an interlaced source (TV, DVD) and that you now want progressive again.
Bob- With bob, one field is discarded and the remaining field is doubled to create a complete frame. For the next frame, the process is repeated with the second field (essentially the frame rate is doubled). This eliminates any feathering caused with weave, but the result is that you're throwing away half your resolution, so non-moving objects can look worse. It is so named because horizontal lines (like in text) in the video can appear to "bob" up and down. Good for a source that has always been interlaced (e.g. TV).
Blend- The two fields are blurred together to make the interlace artifacts less noticeable. This causes a halo or ghost effect in motion areas. Because of this, this method isn't used very often.
Smart (or Adaptive)- This method analyzes the video to find areas that are in motion. For areas that are not moving, a simple weave is performed. For moving areas, either one field's information is thrown away and new data is interpolated or the fields are blended (most smart deinterlacers will let you choose which method want). Deinterlacers of this kind also usually allow you to set a threshold that determines how much movement is required before the deinterlacing will begin. This method has the advantage of only deinterlacing where it is needed (in the moving areas) and preserving resolution elsewhere.
My personal favorite is to use the Smart Deinterlacer filter (set to interpolate) included with VirtualDub. Tmpgenc also has an excellent deinterlacer if you are making mpegs. VideoMach's deinterlacer is pretty good, while Premiere's only performs a simple weave and is pretty much useless in eliminating interlace artifacts.
There are various audio compression codecs available, but most of the time you can dramatically reduce the audio bandwidth by adjusting other audio parameters. A soundtrack that is all speech can really be squeezed into a small file, since intelligibility is usually the only concern.
Sampling Rate: The default sampling rate for our DV devices is 48 kHz, which is overkill for the web, especially when it's just speech (since the sampling rate for CDs is 44.1 kHz, DV audio is actually better than CD quality). Reducing the rate to 22.5 kHz will produce results that are fine for most. For just speech, even 11.025 kHz works, although your narrator will sound like he is on AM radio.
Sampling Resolution: This is either 16-bit or 8-bit. 8-bit resolution has a worse signal- to-noise ratio and a narrower dynamic range (which means it's harder to hear quiet sounds). If you all you have is speech and you really don't care about the quality (as long as it is intelligible), then you might be able to get away with 8-bit. However, your audio may be a bit noisy. 16-bit should be certainly used if you have music in your movie, and some audio codecs only work in 16-bit.
Mono vs. Stereo: I can't tell you how many times I see people whose videos consist of just a voice-over and yet encode in stereo. Unless you are using a stereo microphone (chances are you're not) or are recording with two separate microphones, that voice-over you recorded is in mono. When you encode your project's audio in stereo, all that happens is that the mono track is duplicating and thus your audio takes up twice as much space as is necessary. Besides, why would you even need to hear a voice-over in stereo? Bottom line: when all you have is a voice-over, go mono.