Is it possible to adjust project to any desired resolution? I have a little pocket camera which records in Xvid 640x480 and there seems to be no setting for this kind of footage. Also is it wise to edit  in MPEG4 codec or should I convert to MJPEG for better stability?

Ok I get it now, just have to make a custom render profile. :)

http://www.kdenlive.org/tutorial/kdenlive-how-create-custom-profile