
My Handbrake configuration is something like this..
Now I use another utility, FFmpeg to convert the full-res Mpeg4 file from Handbrake to an iPhone compatable format. Drag and drop the handbrake output file to the "Source Format" block of the FFmpeg window.
I use the "iPodTV" profile as the output format and change the resolution to the 480x320 required by the iPhone. Now encode.
When complete I drag the resulting file into iTunes and sync with my iPhone.
Installation tips: You will need to install FFmpeg first as Handbrake uses it as an encoder.
There are already utilities that can do both steps in a single pass. One can be seen here www.dvdtoiphone.net
