One of the easiest ones to use, which is designed to convert files that can be directly read by the PSP, is 3GP Converter.
Most mobile phones that can play video downloads are capable of accepting the 3GP format (files with the extension .3gp).
These can be converted through 3GP Converter, but remember that a two hour movie will take up a good amount of space.
Sony sells one for $24.99 or you can grab the 3GP Converter off of virtually any freeware site.
When you first load 3GP Converter, you'll notice that everything is in Japanese.
It accepts AAC audio, as well as MP4, M4A, and 3GP files.
Common mobile phone video formats include 3GP and MP4.
The program is free and can be found at 3GP Convertor.