I have been using PQDVD for as long time to convert movies for playback on the Palm and PocketPC, and now the company has released a version of their software specifically for the PSP. Kind of sucks that registered users like me of PQDVD don't get it for free or a special upgrade deal, but oh well. They do have a free version which is very cool (just missing DVD conversion) and you can get it here:

http://www.pqdvd.com/psp/

Sure beats Sony's Image converter...by a mile.