What digital format

The best format for IOS devices is mp4 (H.264 video and AAC stereo audio). Then you can play them with the native video player. The main thing you would lose is surround sound. MP4 will also play easily on both Windows and Playstation. MKV might also work for you, but you would need to use a third-party player app on your iDevices.

Most SD-resolution movies are very watchable at about 1 mbits video rate with H.264. You'd have essentially full quality if you compressed to 2-3 mbits, DVDs use mpeg-2 video at 6-8 mbits, H.264 is much newer and has the same quality at half the bitrate.

For audio, I suggest 192 kbits AAC - that should be transparent for almost all material. 128 kbits is also fine, but the video takes most of the space, there is no reason to squeeze the audio too much.

A 1 mbit video rate gets you about a 1 GB mp4 for most movies - maybe rip one or two movies at that rate, and see if it works for you. Two-pass encoding is generally a good idea btw.