PSP Video 9 is a free converter and management software for PSP. It can convert regular PC video files (like AVI, MPEG, etc) into PSP video files, as well as manage/copy these PSP video files between your PC and PSP. So once you have converted the files to PSP format, you can use the interface to transfer it to the PSP device. The converter interface is pretty simple and self explanatory.
The interface also shows the available space in your PSP and also the file which occupies these space.
PSP Video 9 is a freeware for non-commercial use.