My favourite is Ulead Mediastudio. It's the first software of this kind I've found quite intuitive and now I use it just as habit. It is not better or worse of many other programs. I could make a long video (45 mintes) assembling a plethora of small clips (more than 50) with all kinds of transitions and post effects. The trial version is fully functional and expires after one month. If you don't have particular needs, Ulead Videostudio is a cheaper solution: it comes boundled with many cheap hardware pieces. You may get it with a pci firewire card, or usb card found for less of $5,00 on some internet auction.

When your choosing the save location for the animation you should be able choose what you want to export to in a little drop down menu underneath the save loaction. On a slight side note, i didnt have .mpg as an option, only jpg, png, tif, bmp and avi. Is it broken?