Before you can import a single image or video, everything needs to be in the right file format. Chances are, your images are already in the right format since iDVD will accept any QuickTime-compatible still-image file.
I use TIFF because it's a "lossless" format and I never want to throw away information I might need later.
As a rule, you always want to use the best or highest-quality source material and let any degradation come from iDVD's compression when you burn the disc. After all, if you give iDVD a pixelated, overly compressed JPEG file, for instance, iDVD isn't going to make it look better, if you know what I mean.
The same rule about format holds true for video iDVD will accept almost any QuickTime-compatible video file (except QuickTime VR, MPEG-1, and formats with sprites). But that doesn't mean all video formats are created equal, at least not in the eyes of iDVD. You'll get the best results if video you intend to use in iDVD is exported (or saved) in the DV Stream format.
If you're using iMovie 3, you don't have to do anything iMovie does it all for you every time you save your project:
If you're using Final Cut Express or Pro do the following:
If you want to check export settings, click Options instead of Save.
Speaking of options, if you're sending your DVD across the briny seas to Europe, that is make sure you use the right format for videos. Since our Euro-pals have tellies that use the PAL format rather than NTSC, there are two additional steps you need to perform.
Resolution also matters. The ideal size for graphic images is 640 x 480 pixels. If your images have a different proportion, a couple of things can go wrong: Either the images won't fill the entire menu or button, leaving you with undesirable black bars in the empty space; or iDVD will resize the image, making it distorted or pixelated. To make your images fit the DVD window exactly, use a photo-editing application to resize the image to 640 x 480. For images being used as a button, any width and height with a 4:3 ratio will work.
Nobody wants a squashed ancestor, but that's just what I got for importing a wrong-sized graphic into iDVD:
Sometimes iDVD displayed this image with black bands on either side:
Neither of these alterations is what I wanted. So I put the image of Uncle Yogi back into my image editor (Photoshop 7, if you must know) and resized it to 640 x 480. That made Uncle Yogi look just right:
For video, the ideal size is 720 x 480 pixels. If you import video that's smaller than the standard DVD size of 720 x 480 (NTSC) or 720 x 576 (PAL), iDVD will scale it to fit the DVD window, which will almost certainly degrade the image quality.
One last detail to check before you import any images into iDVD is to make sure your images are oriented correctly. Flip any images that are horizontal in an image editor so they're not sideways in your DVD.