Needs to be either MPeg 4 or H.264 format (an advanced mpeg4 format) for iTunes to be able to import the video file. .m4v, .mp4, and .mov file formats. This applies to iPod, however iTunes is slightly less fussy. May also accept mpg/mpeg if it's mpeg 4 format. It's not always easy to know if .mpg is MPeg 1, 2 or 4.

How to transfer to my iPod (& iTunes) - for video