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Animation should only be used if you need an alpha channel for compositing...
I would recommend On2 VP3, a lot of people would probably recommend H.264 (mpeg4)...
If you were doing AVIs I would recommend VP7 (free for non-commercial, best compression around, VP6 is the version used in Flash 8, and was chosen because of its superios quality/compression ratio, and its price compared to for instance H.264 (VP6 has smaller file sizes and better quality than H.264, but is mostly used for shoutcasts, because it's the ideal streaming format, not sure why VP7 hasn't gained the same popularity, as it's an upgraded version))...
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The Zigg (Take me off for great justice?)
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