I've had luck on making iPhone/iPodTouch compatible movies using x264 with ffmpeg yesterday:

#!/bin/sh
ffmpeg -r 29.97 -vcodec libx264 -flags +loop -cmp +chroma -deblockalpha 0 -deblockbeta 0 -crf 21 -bt 256k -refs 1 -coder 0 -me_method full -me_range 16 -subq 5 -partitions +parti4x4+parti8x8+partp8x8 -g 250 -keyint_min 25 -level 30 -trellis 2 -sc_threshold 40 -i_qfactor 0.71 -s 480x320 -aspect 16:9 -acodec libfaac -ab 112kb -ar 48000 -ac 2 -i "$1" "$2"

Cool!

Just bought a new Ipod Touch 3 for my wife…