The .vob file is just a glorified .mpg. In some cases you can just rename it .mpg and play it however the correct procedure is as Rocknbil suggested. The vob file also contains extra data specific to the DVD which may interfere with some programs for playback and editing. You can also use the infamous DVD Decrypter to do this if you can find a copy. Actually a much better tool for the job because you can rip specific portions of the DVD. last time i used vob2mpg it just ripped the entire disc into one video.
You may also want to look into using a MPEG editor for editing before encoding. MPEG can be somewhat troublesome to edit especially with the wrong tools. One free tool is called cuttermaran but this only does simple cuts, other good tools for editing MPG include Womble any Ulead editor and the TMPGenc line of products.
I'd also research deinterlacing if you really want to make it look good. If you have ever seen video clips that have those horizontal lines, especially during fast motion that is because they didn't deinterlace the video. thsi should really be done to any video you intend to distribute via the web intended for playback in embedded content.