ffmpeg -i input.avi -acodec libfaac -ac 2 -ab 128k -vcodec libx264 -b 1000k -threads 0 output.mkv
ffmpeg version N-32077-g5f5e37e, Copyright (c) 2000-2011 the FFmpeg developers
  built on Aug 24 2011 17:01:01 with gcc 4.4.5
  configuration: --enable-gpl --enable-libfaac --enable-libmp3lame --enable-libopencore-amrnb --enable-libopencore-amrwb --enable-libtheora --enable-libvorbis --enable-libx264 --enable-libxvid --enable-nonfree --enable-postproc --enable-version3 --enable-x11grab
  libavutil    51. 13. 0 / 51. 13. 0
  libavcodec   53. 12. 0 / 53. 12. 0
  libavformat  53.  9. 0 / 53.  9. 0
  libavdevice  53.  3. 0 / 53.  3. 0
  libavfilter   2. 34. 2 /  2. 34. 2
  libswscale    2.  0. 0 /  2.  0. 0
  libpostproc  51.  2. 0 / 51.  2. 0

Seems stream 0 codec frame rate differs from container frame rate: 29.98 (65535/2186) -> 29.97 (2997/100)
Input #0, avi, from 'input.avi':
  Metadata:
    encoder         : VirtualDubMod 1.5.10.1 (build 2439/release)
  Duration: 00:42:27.98, start: 0.000000, bitrate: 1143 kb/s
    Stream #0.0: Video: mpeg4 (Advanced Simple Profile) (XVID / 0x44495658), yuv420p, 512x384 [SAR 1:1 DAR 4:3], 29.97 tbr, 29.97 tbn, 29.98 tbc
    Stream #0.1: Audio: mp3 (U[0][0][0] / 0x0055), 48000 Hz, stereo, s16, 128 kb/s
[buffer @ 0x14daf40] w:512 h:384 pixfmt:yuv420p tb:1/1000000 sar:1/1 sws_param:
[libx264 @ 0x14d96c0] using SAR=1/1
[libx264 @ 0x14d96c0] using cpu capabilities: MMX2 SSE2Fast FastShuffle SSEMisalign LZCNT
[libx264 @ 0x14d96c0] profile High, level 3.0
[libx264 @ 0x14d96c0] 264 - core 116 r2057 0ba8a9c - H.264/MPEG-4 AVC codec - Copyleft 2003-2011 - http://www.videolan.org/x264.html - options: cabac=1 ref=3 deblock=1:0:0 analyse=0x3:0x113 me=hex subme=7 psy=1 psy_rd=1.00:0.00 mixed_ref=1 me_range=16 chroma_me=1 trellis=1 8x8dct=1 cqm=0 deadzone=21,11 fast_pskip=1 chroma_qp_offset=-2 threads=9 sliced_threads=0 nr=0 decimate=1 interlaced=0 bluray_compat=0 constrained_intra=0 bframes=3 b_pyramid=2 b_adapt=1 b_bias=0 direct=1 weightb=1 open_gop=0 weightp=2 keyint=250 keyint_min=25 scenecut=40 intra_refresh=0 rc_lookahead=40 rc=abr mbtree=1 bitrate=1000 ratetol=1.0 qcomp=0.60 qpmin=0 qpmax=69 qpstep=4 ip_ratio=1.40 aq=1:1.00
[libfaac @ 0x14ef700] libfaac doesn't support this output format!
Output #0, matroska, to 'output.mkv':
    Stream #0.0: Video: h264, yuv420p, 512x384 [SAR 1:1 DAR 4:3], q=2-31, 1000 kb/s, 90k tbn, 29.97 tbc
    Stream #0.1: Audio: aac, 48000 Hz, 2 channels, s16, 1000 kb/s
Stream mapping:
  Stream #0.0 -> #0.0: mpeg4 -> libx264
  Stream #0.1 -> #0.1: mp3 -> libfaac
Error while opening encoder for output stream #0.1 - maybe incorrect parameters such as bit_rate, rate, width or height