Jonny has released PSPEnc for the PSP, a GUI for FFMPEG. It uses Avisynth to handle the video. The output is an MP4 file compatible with PSP (only MPEG4 SP atm). AviSynth_040905 is required for PSPEnc (included).

Features:

Avs, Avi, Mkv, Ogm, Mpg, Wmv ... input (basically everything working with DirectShowSource).
Automatic crop/addborders, to obtain correct aspect ratio. Automatic video bitrate calculation (you have to choose only audio bitrate and total output size).

1 pass, 2 pass, 1 pass with fixed quantizer, compressibility test, size prediction for fixed quantizer encodes. Job list. You can see quantizer distribution after every encode. You can run multiple istances of PSPEnc.

Notes:

To encode from DVD source you should provide an avs script with progressive, cropped video and specify the correct aspect ratio (usually i do this with GKnot ^^). Compressibility test is based on the quantizer you specify (it basically tell you how near/far you are from this quant). If you obtain an output with wrong size (this is applicable mainly for 2 pass encodes), you have probably saturated video (and/or audio!).