JPEG core with NiosII

For software advice my best recommendations would be to go through the software development tutorial that's supplied with the tools and also try out various software examples available from within the IDE. That'll cover a good mix of simple to medium level software development. Since you'll be doing some board interfacing, the software example "board_diag" would be a good one to see how to communicate to peripherals.

The vga controller that you are looking at I believe is a master peripheral that you tell it where your frame buffer is located and it fetches the frame out of memory and displays it to the screen. This means you need to have VGA display hardware such as a Lancelot card (search the forum to find out more about that).

You might be able to find other video examples in this forum under the IP section. Unfortunately I haven't had the opportunity to look into the portable reference design much so hopefully someone else will have more information to provide you. I believe that the hardware is setup for CIF video, however, I'm not sure if QCIF is easily supported (i.e. you may need to make modifications).