This is good news and all, but I also have more to add! For anyone who wants to view movies on their new iPod, here's an easy way (at least for me to convert 'em.)
1. Download
PSP Video 9
2. After installed, hit the setup tab, and set the the One-Click Profile drop down menu so it says "SP/320x240/29.97fps/768kbps Stereo/128kbps"
3. Now, Hit Convert, then the "One-Click Transcode" button, and select the file you wish to convert. It will automatically begin converting. Depending on your CPU speed, it will go faster or slower. (My Athlon XP 2600+ takes about 20 mins to convert 30 mins of video.)
4. The files will be saved in the output folder you specified.
Here's a pic of what my setup screen looks like. The most inportant part is that the One-Click Profile looks exactly the way it is on my pic. Your output folder doesn't matter, as long as you remember where it is
After the file is converted, rename it to something you will remember, and simply drag it into iTunes when you want to put it on your iPod.