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Same here for me... evidently there's still problems w/ the h.264 stuff, mpeg-4 works great for me though. I've seen the same problem all over the net.
I finally got it to work with help from this forum hint
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Using the ffmpeg xvid encoder with an mp4 container produces files that are playable on a video iPod. Under the "Video" tab select "Xvid [.mp4] ffmpeg" and use AAC encoding, or use the PSP setting (which uses the Xvid mp4 encoder) The iPod officially supports this format up to 480x480, but reports of success up to 640x272 have been circulating.
Obviously we'd love it if our favorite tool ffmpegx could support a baseline profile h.264.