If you're talking about using the mechanical encoders on these pages, make sure you use the gray scale version. The BCD will screw you up.
If you're talking about the optical encoders, then you have a couple of choices. I think you can rig the RC as a counter. One way would be to tie the encoder into a low priority interrupt and fire an interrupt on each pulse. This may become very band-width intensive though.
There are also chips available which do all the counting and demodulating for you. I haven't looked through digikey to find one, but I'm sure they sell them. I've use HPs (now Agilent's) chips, in particular the HCTL1100, which is far more expensive and powerful than you would need.
Or, you could rig up a counter circuit of your own. Depends on your electrical design skills.
If you need more resolution, you can always attach a measurement gear to your system. This has the added advantage of protecting your encoder from the shocks and abuse that your drive wheels will experience. If you do this, you need to remember to use a fine pitch gear set or an anti-backlash gear to minimize the errors introduced by backlash.