I have Windows 7, and it comes with Movie Maker. Load your file there, edit out the dead air and add a few titles, etc., (the program is simple, but intuitive - but don't ask me to explain it to you :-) ) When you re-save the file, the size will be cut way down.
I have one of those keychain cameras too... I estimate that I use about 1MB/sec when filming. I haven't used mine for a while though.
Bob