Enter Videora Converter, which can transcode just about any video format (including AVI, FLV, and VOB) to iPod/iPhone-friendly H.264 or MPEG-4. A new 4.04 version was just released, and it's better than ever.
It's not, however, the most user-friendly program in the world, so here's a quick walk-through:
-- Download and install the proper version for your device (there are six versions of Videora, one each for the iPod Video, iPod nano, iPhone 3G, etc.).
-- Run the program, then click the Convert button.
-- Click the Video File tab, and then choose Normal Mode (unless you're an advanced user, in which case you may want Power Mode).
-- Now you can follow the prompts to select the file you want to convert, choose an output directory, and tweak various video settings. Along the way, watch for the bright orange Next button in the ad-heavy main window-it's not always obvious that you're supposed to click it to move onto the next step.
Now sit back and let Videora work its magic, which could take upwards of an hour or two depending on the size of the file and speed of your PC. By default, the program will add newly converted files to your iTunes library (look in Movies), ready for syncing to your device.