dvd-slideshow can create mpeg4 video content.
This output option is considered "Beta" software, so it hasn't been tested as well as other features. Hopefully we'll be able to encode to an ipod/ipad-compatible .mp4 someday, but the settings for these devices need to be very specific.
dvd-slideshow -mp4 inputfile.txt
also, you can try the new output size option:
dvd-slideshow -mp4 -s 320x240 intputfile.txt