You can't rip DVDs into iTunes. It's illegal. But if you're really interested in doing it anyway, there are options available. You're going to need a progam that decrypts the DRM on the DVD so that you can rip it to your computer. I use DVD43, which is freeware.
http://www.dvd43.com/
In addition, you'll need a DVD transcoder to rip the DVD onto your computer. The free industry standard is HandBrake, a program that works well and has many different configuration settings. Again, I use it whenever I want to rip (legal) DVDs.
http://handbrake.fr/
Finally, if you want to get it onto your iPod, you'll need a program that will re-encode the video from an AVI to an iPod- or iPhone-compatible MP4 h.264 format. I use a free program from DVDVIDEOSOFT, which is simple but works well.
http://www.dvdvideosoft.com/products/dvd/Free-Video-to-iPod-Converter.htm
So have DVD43 running (it's just a tray icon) when ripping using HandBrake, and then convert using DVDVIDEOSOFT.
DISCLAIMER: I, ski.the.selkirks, do not condone the illegal ripping of DVDs. Make sure you own a copy of a DVD before you rip it. Do not distribute ripped DVDs. It is a violation of the Digital Millennium Copyright Act (DMCA) and punishable by Federal law. You have been warned.