Just a word of caution on this stuff:
While I haven't tried with the PSP I have tried in the past with TiVo, iPod, AppleTV.
You'll spend more time converting the movies than you would actually watching them. A lot more time. This is after you figure out how to get it from one format/codec to another. There are a bunch of different setting that you'll play around with, etc.
Basically, as nice as it'd be to just rip a DVD and watch it wherever, trying to get to that point (and you won't get to that point - everything is incompatible or of sub-par quality) will cost you a lot of time transcoding.
You're probably better off just picking up the UMD movies. I see them around for $5-10, now.
I wish it were like MP3s, JPGs, GIFs where everything 'just worked' (and with MP3s you've got just a few setting which make sense to most people).
If you're in it to just play around with it and, at the end of the day, say, "Look what I did! Isn't that cool?" then go ahead. If you're looking to convert a library of DVDs so that you can watch them on your PSP then you'll likely still be working on converting that library after your interest in your PSP has waned.
Another tool to checkout: Handbrake
http://handbrake.fr/