Not all members got software to covert to all formats, but to some or don't know how to use them
Not all formats are played by all players, software and hardware, computer or consumer electronics devices
Restricting to only one format will reduce the choice
Best in quality is always the original release format untouched, what ever it is WMV, MP4, MOV, DVD Video, Blu-ray Disk
There is always a trade off between quality and size, there are different opinions what is small size and good quality and what is the right balance
If we would have to ban a format, I am quite sure the first would be rm and rmvb, small files but lousy quality.
My personal next would be flv, but it may contain MPEG-4 AVC like the MP4 you seems to prefer and therefore can be good quality (but most I watched are lousy, certainly because converted too many times, see above remark about the original release format)
For share ratio, it does not mater if a file is big or small, what matters is the moment when you enter a swarm, the connectivity of your torrent client programme, the upload rate, the queue settings etc…
I'll always prefer the original DVD at 8 GB versus a 700 MB MP4 of a video for home use.