I had a very hard trouble finding how to encode a video for the PSP using mencoder. Of course there is always ffmpeg or WinFF but I am more familiar with mencoder so I prefer the last one. Moreover, all the command-line I found using ffmpeg gives a movie which size is about 350Mo. With mencoder you can achieve a size of about 250Mo.
The command I use is the following one :
You can take a look at the quality result here. I used the trailer of Hulk.
mencoder -sws 9 -vf scale -zoom -xy 480 -ovc x264 -oac faac -faacopts br=64:mpeg=4:object=2:raw -channels 2 -srate 24000 -x264encopts crf=26:me=umh:me_range=16:subq=6:trellis=2:global_header:level_idc=30 -of lavf -lavfopts format=psp
Comments are welcome either here or on the previous linked page.