best format for videos

[enlightenedone]

I have a zune 80 and an xbox360 that I used to stream videos to my hdtv. I have a small library of tv shows and movies that are .avi, but since I got my zune a few weeks ago I've been looking to find a format that works across the board before I expand my video library. I have reripped a few videos as .wmv but H.264 seems to be a little easier to work with. I just wanted to know if H.264 is still a good enough quality to stream to a large (56") TV, or is there a better way to go about all of this?

PS I just got a 500G external HDD so file size isnt too big of an issue.