The Official UK PlayStation site has also published an article detailing ALL of the features included in PlayStation Portable system software update 5.00. It reveals that support for MPEG-4 AVC is included.
To quote: PSP system software version 5.00 has increased the number of file types that can be played to include MPEG-4 AVC (H.264) Video Main Profile (AVC CABAC) in 640 x 480 pixels.
If you update your PSP system, the system software version will be 5.00 and the following features will be updated.
Main features updated in version 5.00
• PlayStation®Store is now available on the PSP™ system
Using a Wireless network connection, you can now download (as a purchase or for free) products such as games, additional items for games, or video content for use on the PSP system.
• The feature for outputting video from PlayStation® format software to a TV has been improved (PSP-2000 only)
You can now output video from PlayStation format software to a TV in full-screen size.
You can now use video output cables that do not support video in progressive mode to output video from PlayStation format software to a TV.
• The number of file types that can be played has been increased to include MPEG-4 AVC (H.264) Video Main Profile (AVC CABAC) in 640 x 480 pixels
Some video files of this type may not be playable.
• [Sleep Timer] has been added as an option on the control panel.
• [Title Display] has been added as an option under [Video Settings].
• [USB Auto Connect] has been added as an option under [System Settings].
• [Backlight Auto-Adjust] has been added as an option under [Power Save Settings].
• The default Theme for the PSP system has been redesigned.
• You can now use a full-size on-screen keyboard.
• This system software update includes all features contained in previous versions.
• The new system software will preserve any settings previously made to the PSP (such as the Parental Control level).
• Depending on the software title, you may not be able to play without first updating the PSP system software.
• Do not perform updates using any data other than the official update data provided by Sony Computer Entertainment over a network or on disc media, and do not perform updates by methods other than those described in the product documentation or in this site.
If an update is performed using data from another source, by another method, or with a PSP system that has been altered or modified in any way, the PSP system may not operate properly and may not be able to install the official update data. Any of these actions may void the PSP system warranty and affect your ability to obtain warranty services and repair services from Sony Computer Entertainment. More PlayStation 3 News...