This is my bread and butter. I have a PS3, 40GB version and it's hooked up directly to my N router via cable. My computer has Tversity running and in my home office and connects wirelessly to the same network and I have all my DVD's ripped to my HD on the computer mostly in ISO, IMG or actually opened up so you see the .VOB files. Now the PS3, and trust me I have tried a million ways, LOVES its .MP4 video files, but also now with a recent update also plays DivX.
It?s your choice. You can take that ISO file (either already on your computer or have to make one from the original DVD movie) and use a program that takes the ISO directly and converts it to either MP4 or AVI (DivX). The one I use is Fair Use Wizard. Works like a charm. I think there are actual settings for PS3.
If I have an ISO that is already opened as I was mentioning that I have the VIDEO.TS directory and all the files are in .VOB, then Handbrake works wonders and is fast and very good quality and again has a setting for PS3 which gives absolutely great quality and you just need to work with audio settings to ensure you are still getting the 5.1
If I have a MKV file, then I use MVK2VOB to convert the file to a MP4? again works wonders.
However, lately I have really gotten a bit tired of running Tversity. What I do now is use an external 750 HD, formatted to FAT32. I have a external "docking" station for it on my computer and again another docking station at my PS3. I take the drive and plop into this dock (connects to my comp via eSATA) and I transfer all my movies that I have encoded to MP4 etc. Remember it has to abide by the FAT32 standard so the files have to be no more than 4GB or some programs allow you to split or span them to multiple files (MKV2VOB is great for that).
Once they are all on there, I shut down the drive, pluck it out and put into the docking station at the PS3 ? connected to that via USB. Presto... all my movies there and I don't have to worry about quality etc. Don't get me wrong, Tversity works great but the issue was that when I had a HD/BD Rip in MKV that is like 24GB, and I have to stream that over my wireless connection... that ain't gonna happen or it does but it is still jerky over an N based wireless network.
When you encode your ISO, or VOB or however you have your current DVD library, play around with the size, quality, audio settings etc. You might figure out that to convert say 100 DVD discs you have may take a lifetime on some settings.. so go easy on that. I know Handbrake and fair use wizard support multi core and my quad core q6600 really gets a workout using these programs.