I’d recommend first right click on the video strip->Movie Strip->Set resolution. This will set the output resolution to the resolution of the video. Then if the X and or Y resolution is an odd number then as Martin suggested subtract 1 from it. Another option is to change the codec to DivX(In Blender it is listed as “MPEG-4(divx)” or you can change the container to one of the the ones that Martin points too. Side Note: MPG-1 and MPG-2 containers are the same as setting MPEG-4 container to use MPG-1/MPG-2 codec. At least in quality.
