VCD's allow 5.1 surround sound, I know that. I found a German language page on how to do it, I don't know if I bookmarked it or not. And actually I think it was for XVCD because that's what I was searching for when I found it.
I'm not sure about surround sound for DivX but I downloaded a few that seem to have surround sound, unless my sound card is just uber good at sampling sounds and knowing which speaker they should come from.
If it's for your PC then go with DivX, but I think, generally speaking, VCD is less hassle and better visual/audio. Why not just keep the ripped DVD files on your computer and watch them through WinDVD or something, that way you've got them in perfect DVD quality without worrying about compression. Just ZIP em.
