Hey Punk -
first thing - in video, it's not a "portfolio" - that's for still stuff - photos and graphics -
in video it's a "reel" -
OK - that aside
Rule one - keep it short - 2 to 5 minutes at most - with the option to see more stuff also on the disc.
Your intro demo video should tell "your" story... what are your strengths, who have you worked with and of course, a collage of your "best shots".
With DVD (I love and use DVDA for my demos) you will then be able to segue to a menu with a selection of your other work. That can, and generally should be "full length", that is, don't shorten.
I always tell my reps that if they are intending to make a mass mailing of Demo Reels, they should just throw them away immediately, and save me the postage. People won't watch a "cold call" demo without a specific reason.
We send postcards first and then follow with (a grillion) phone calls. All screenings are made with a rep (or me) in attendance.
Never talk during the screening - either watch the screen (like it's the Paris Hilton video), or watch the client, to see if they're interested. Talk AFTER the screening. If you have to explain something, then it shouldn't be on the reel.
Generally, you've only got one shot, so make it good - But - on the other hand, don't put EVERYTHING you've got, on one reel.
My experience is that it takes a number of screenings to "make a sale".
Wait a few (four to six) weeks and call again - "Hey, Bob, you've GOT to see this new stuff we just shot". By the third or fourth screening you'll generally be in line for the next project.
If they won't see you after your first, you are not showing them what they NEED.
Commercial (to make money) video ALWAYS must fulfill a purpose for the person who is buying it. The greatest Music Video Director won't automatically make a great Industrial Director or Wedding Director. Decide what you'd like to do with your life, and your time, and make the corresponding sample.

Good luck,
v