Hi Sokaon, and welcome!..MKV is a 'Container' much like AVI, MP4, and VOB is a container..
To rip DVD's you'll need something like DVDFab HD Decrypter to rip the DVD to your HDD and then convert the resulting VOB's to x264, xvid/Divx, etc. and use the MKV, AVI or the MP4 container..
The All-in-one (Triaware) version of DVDfab will rip and convert to MP4(not sure it uses MKV)..
When converting from one format to another i.e VOB to h264/MKV), you will always have some quality loss, especially at the lower bitrate settings..
The question is, how much quality are you willing to sacrifice, in order to save space?..For that, you'll need to conduct some trial conversions with different tools/settings etc. and SEE for yourself..
I don't normally do DVD-->MKV, but I have done some DVD->MP4 conversions..
Try AViDemux, Xvid4PSP, Handbrake, Staxrip, AutoMKV, FairUseWizard etc. to name a few.