Man... delta.. make me come out of hiding to "enlighten" you.
What are you viewing these videos on? Hopefully not a computer monitor as they are meant for
arcade front-ends. Also they aren't meant to be played fullscreen. Why in the world would you do that? (screen saver is not a valid answer as there are plenty of screensavers floating around that actually run mame instead of vids of mame)
And everybody is entitled to their opinon, but attract screens are the proper thing to capture for the preview, not a random bit of gameplay. Why? Common sense really. Attract modes loop, they show both the game's "plot" and actual gameplay, and more importantly, when overlayed on a 3d model (such as in 3darcade) it makes the model appear to be a running machine instead of a model with some lame, 30 second gameplay texture applied.
Lower quality, of course..... because you downloaded them off the internet silly. The packs are highly compressed because it's the only way they can be moved around the net. Besides that, they were originally made for 3darcade, and a room of models with dvd quality videos playing on each tend to slow down the average computer.

If you want full quality you have to make them yourself. Use buddah's movie maker hack to do so.
A note on mngs..... it doesn't matter how nice they look because nearly nothing supports them. Advance mame supports them and that's about it. They aren't directshow compliant due to thier gif-like qualities, so that isn't likely to change soon either.
So no comparison needed..... avi's are better because you can actually run them in your fe of choice.

I hate for you to be my first vicitim, but quite frankly, we all knew that mng's technically offered superior quality, it's just they aren't useable in anything.