Fastest way of video encoding/conversion of YouTube videos?

What is the best hardware for video encoding a YouTube video from mp4 format to an iPod video 5th generation. I am confused as to whether the CPU or video card does the task. I am currently using an AMD Athlon XP 2500+ and an ATI Radeon 9550. It usually takes about double the time to encode for the length of the video. (i.e. 5 min. video takes 10 mins.) using Videora iPod Converter. How much faster would a Core i7 and GTX 295 benefit than my current specs? Which component is important?