These are the video formats that the Touch supports:
H.264 video, up to 1.5 Mbps, 640 by 480 pixels, 30 frames per second, Low-Complexity version of the H.264 Baseline Profile with AAC-LC audio up to 160 Kbps, 48kHz, stereo audio in .m4v, .mp4, and .mov file formats; H.264 video, up to 2.5 Mbps, 640 by 480 pixels, 30 frames per second, Baseline Profile up to Level 3.0 with AAC-LC audio up to 160 Kbps, 48kHz, stereo audio in .m4v, .mp4, and .mov file formats; MPEG-4 video, up to 2.5 Mbps, 640 by 480 pixels, 30 frames per second, Simple Profile with AAC-LC audio up to 160 Kbps, 48kHz, stereo audio in .m4v, .mp4, and .mov file formats
As you can see, H.264 is, indeed one of them.
Motion JPEG is an outdated format that has largely been superseded by formats such as H.264 and MPEG-4.
WMV is a Microsoft proprietary format so it seem unlikely that Apple will license it when there are other available formats.
.avi is not a format per se but a container format. It can contain virtually any compression scheme, including Full Frame (Uncompressed), Intel Real Time (Indeo), Cinepak, Motion JPEG, Editable MPEG, VDOWave, ClearVideo / RealVideo, QPEG, and MPEG-4 Video.
There are many available video conversions programs so most of us manage to make do with the multiple formats the Touch does support.
If you want to submit feedback to Apple, use this link:
http://www.apple.com/feedback/
Best of luck.