Build your own iPod DVD converter. The Wired has a simple three step guide for putting those DVD movies on a Video iPod and playing in iTunes.1. Decrypt the DVD
DVDFab Decrypter removes a DVD's copy protection.
2. Combine the Video files
Ripping a DVD produces a bunch of cryptically named .VOB files. VOBMerge 2.5 will string them together. To find the movie, look for a series of very large files named something like VTS_07_1.VOB, VTS_07_2.VOB, and so on.
3. Convert the Movie into MPEG-4 format
3GP_Converter turns your DVD movie into an iPod-compatible MPEG-4 file. Select "Model: MP4, for iPod" as the conversion mode (there is also an option for the PSP). The resulting file is ready for iTunes.
Source: Wired