Hey James, good question and YES it is.

From my understanding, psp's use mp4 (mpeg-4) as the video format, so any video converted to THAT format will fit on there with no problem at all! In my opinion,
Replay Converter is the easiest to use, and you can convert MANY file types (including flv(youtube flash), and swf(full length movies) to the mpeg-4 format with no problems!
Oh, if you want to really PIMP your psp further, check out
AllPspGames.Com for a bunch of stuff including Games, Game Reviews
Game Cheats, Movies, TV Shows, Music, Software, etc etc...
Enjoy! :-)
The Media Guru