I'd like to just add quickly that the video files Fraps produces are that big because there's a massive amount of data required for videos. It's not a shortcoming of the software.
Video compression is a long and slow process. You'll find that if you encode a video using DivX, or Xvid, or something along those lines, it will take far longer than it took to record. So instead, Fraps uses a very simple form of compression. It's fast, it's lossless, and although it doesn't produce results which are practical for a final product, it's still smaller than raw uncompressed video, without having too dramatic an impact on game performance.
There's nothing stopping you from compressing the videos Fraps produces further. In fact, that's what I'd reccomend doing anyway.