How to encode a video for the iPhone with Handbrake
Based on the link given in this answer on stackoverflow I will try to explain how to encode a video in an iPhone friendly format. 

The steps below are carried out on a Mac, but the windows version of Handbrake should be similar.


Open Handbrake.
Go to File -&gt; Open Source and browse to your video.
Choose MP4 File as container. 
Input the settings shown below for the respective tabs:



  Picture tab:
  
  Keep aspect ratio - check
  Width - 480 (set to 960 if encoding for the iPhone 4)
  Anamorphic - None
  Cropping - Automatic  
  
  Video tab:
  
  Codec - H.264
  Video quality - RF = 21
  Constant framerate - 30  
  
  Audio tab:
  
  Codec - AAC
  Bitrate - 128
  Sample rate - 44.1
  
  Advanced tab:
  
  Add the following text in the textbox labeled Current x264 Advanced Options String: if you're encoding for a pre iPhone 4 device:
  
  cabac=0:ref=2:me=umh:bframes=0:weightp=0:subq=6:trellis=0:8x8dct=0:level=3  
  
  If it's an iPhone 4 or higher the text should be:
  
  level=4.1


The Advanced tab should look like this (for the iPhone 3 encode):


Here's a MediaFire link to the converted video for iPhones before the 4:

http://www.mediafire.com/?tlyzcg1hyygq8zf