A number of users have reported an issue in which movies previously playable movies are suddenly unplayable after an iPhone sofware update.
One user writes:
"I had the same issue with some of my Videos that were converted using Visual Hub. Once I upgraded my iPod Touch to 2.0 they stopped working. I eas confused at first as all of the the ones that still worked were in 4:3 aspect ratio. Anyway after trying many different solutions and settings. I found that if I used ffmpegX instead of Visual Hub to encode I had no problems with any of the resulting my videos-both 16:9 and 4:3 aspect ratio and different frame sizes."
Per the above user's commentary, re-encoding movies may be the most viable fix for this issue. Try using an alternative video encoder or a lower resolution/bitrate.