Hackszine.com has published a step-by-step guide to ripping (off) your personal DVDs and re-compressing them into a format that plays nice with iPhone. The article is basically just a quick tutorial for the amazing program, Handbrake, and while their suggested compression settings will work, the testing department at iPhonePOV was able to achieve considerably smaller file sizes by experimenting with Handbrake's 'Target Size' and 'Picture Settings.'
If you're feeling adventurous, disregard Hackzine's suggested sizes and tweak the horizontal 'Picture Setting' to 480 (iPhone's native size) and enter a 'Target Size' of 500 (MB). The resulting movie will be the same quality of Hackzine's movies and roughly 60% smaller. (For a closer look at iphonePOV's settings, click the picture above.)
NOTE: Handbrake will NOT be able unable to rip certain DVDs--A lot of DVDs from Sony Pictures will not load into handbrake.
Legal Disclaimer: iphonePOV does not condone, permit, encourage, endorse, support, practice or otherwise allow the ripping of DVD's (or any content) that is not legally permitted under the terms of the Digital Millennium Copyright Act.