I use Adobe Media Encoder which has presets for iPad - to ensure a smaller file size I go down to 640 x 480 @ 1200 kbps which still looks great when playing at fullscreen.
Keep in mind how much motion there is in your video files as well. If I have a person sitting and talking with no camera panning, 1,200 kbps would actually be overkill to make this look decent. I get away with rates as low as 700 and my output files look great. Be sure to look for options to have multiple encoding passes on the video when outputting. This ups the quality of the frame prediction and gets better quality with smaller data rates.