Hope this is not too late to help
I bought a GoGear SA060 for my son and ended up in a similar position as you with the videos but I managed to get handbrake to encode video in a format the GoGear can read.
Philips Support were very polite and friendly but their knowldege only extends as far as the instruction manual.
My solution is:
1. Download and install Handbrake (http://handbrake.fr)
2. Load the source file
3. choose an output filename (handbrake will make it end in .m4v)
4. Select the "ipod" preset
5. In the Video tab:
change the framerate to 256. In the audio tab:
select peak frame rate (VFR)
select "constant quality" and set it to 25
select the AAC(faac) codec7. Click on the picture settings button in the menu at the top of the screen. You can change the video size here. I left it at 320x176 for my test video and it looked great, possibly you can get away with making it even smaller. As far as I can tell the screen resolution for the GoGear is 480x320 so anything larger than this is a waste of data.
set mix to stereo
8. Click add to que
9. Click start
11. once it is finished change the file extension FROM ".m4v" TO ".mp4" or else the GoGear will not see it.
12. copy the file to the VIDEO folder
13. sometimes I have to restart the goGear before I can play the file but not always.
My 12 minute video ended up being 34 odd megabytes after converting.
The above settings are not 'written in stone'. The 'universal' preset also worked. Just check the framerate is 25 and picture size is less than 720x476. At larger picture sizes the Mbps limit may catch you out so I'd tend to aim for the max of 480x320 anyway. Once I got the video working I had to play a little to get sound working.
At any rate this is a good starting point that you can tinker with.
I registered here and left these notes as this thread came up when I was looking for how to make the video work.