You can do this with mencoder, using the ss and endpos parameters.
For example, to keep only from 1:25 to 2:45 of video.avi, you'd use the following command :
mencoder -ss 1:25 -endpos 1:20 -oac copy -ovc copy video.avi -o part1.avi
Then, to join the segments :
mencoder -oac copy -ovc copy -o output.avi part*.avi
Or you can encode them directly, for example in xvid with default encoding options :
mencoder -oac copy -ovc xvid -o output.avi part*.avi