Just a couple responses to recent comments:
1) the PSP is nt really tearing up the market, and the UMDs DEFINATELY aren't. THat's not becuse people don't want a portable movie player, though. The UMDs are more than DVDS and can only be used with the PSP and the PSP itself if really a gaming machine with a media center tacked on, and it's too expensive to be a half asses media center for people who don't care about the games.
2) Having a dock to link a stand formfactor iPod to a TV would also let you have a remote for it, which would be terrific both for the fact it could be like a DVD player AND you could hook it into your home theatre system and control tunes via remote.
3) If DVD content can be done at ~500mb per hour (as was claimed previously in this thread), I see this being possible. An 80gb vPod could hold 150+ movies, easily, which is more than most peoples DVD collection by far. A half hour (22 minutes or so usually) would be 200mb easily, which is NOT a bad download at all.
4) If Apple does launch an iFlicks store, I hope they have monthly rental plan. Theywould have to limit the number of movies you could get a month, but Netflix is really putting the hurt onto pay-per-movie rental systems (ie, rental stores) and I think they would kill Apple if they wanted to charge regular rental fees per movie. Say $20/month for 10 rentals? I'd think that 10 is about the most that people could watch a month. Another alternative would only work if the DRM was good enough. Simply allow you to pay a fixed rate, maybe $15/month, and you can have any one movie 'checked out' at a time. You can have a queu list like Netflix and it would d/l the next movie or two in the background from a BT swarm so you could watch it when YOU were ready. Or you can grab something else as your next rental if you are willign to wait.
This would amout to unlimited rentals a month, but wouldn't keep you a member so that you would be able to get new movies or rewatch old ones, etc.