It depends on the file. I did a lot of testing and found some great settings that have no skipping at all.
I recently encoded a handfull of movies for my Xoom, one being the new Tron Legacy movie.
I re-encoded a 1080p mkv file
these are the settings I used
Picture Settings:
Anamorphic: strict
Filters:
Decomb - default
Detelecine - default
Target size: 3900 (since the xoom can't handle files larger than 4gb)
Audio tab: remove all but one channel since you don't need multiple streams
Advanced:
Referenced Frames - Default (3)
Maximum B-Frames - 0
CABAC Entropy Coding: unchecked
8x8 transform: unchecked
weighted p-frames: unchecked
option string should be: 8x8dct=0:bframes=0:cabac=0:weightp=0
screenshots are...
http://img.exstatica.net/images/screenutu.png
http://img.exstatica.net/images/screenlsl.png
exported preset
http://www.exstatica.net/HB_Export.plist
If you use the exported hb settings make sure you still modify the picture settings as its not stored in the preset.