I've rendered a short (3 minute) project to DV AVI and MPEG video. The AVI rendered video is very jerky, both video and audio. The MPEG rendered video is fine.
I defraged my hard drive before the test.
The jerky avi may be the result of compression settings- try a lower bitrate (unless you need to output to tape). If you are doing computer playback only (web/cd/intranet) consider dumpimng avi as a destination format and using WM, RM or QT.