It is very confusing what you can encode on the PSP, it has all kinds of strange restrictions. Like, the file names have to be of in a directory called MP_ROOT/100MNV01 and the file name has to be MV*.MP4. The PSP is really a picky device. Also, when you are encoding, you have to be pretty careful what you use. Here is the data
How to encode a movie for the Sony PSP with ffmpegX (MacOS X)
# If your source is 16:9 sources, you may also use non-standard size of 368×208 . Note that the PSP screen has a resolution of 480×272, but for movie playback, width x height must not exceed 76800 pixels, so the smaller sizes listed above have to be used. Note that no matter the non-standard resolution used, the picture will be always scaled to the full 16:9 PSP screen size.
# If your source is 2.35;1 you must prior reverse it to 16:9 by using black bars.
# For 4:3 sources, always use the standard 320×240 resolution. To gain a little quality if you don’t mind for the bigger filesize, you may use a video bitrate of 400 kbps. And you can use a bit rate of up to 128Kbps
