Why does iTunes need to convert a h.264 mp4 file

[m600i]

I created an H.264 mp4 from dvd in aimersoft video converter and in cucusoft ultimate and I can't just drag and drop into my iphone using itunes, I have to right click on the movie and convert it for iphone. Does the movie need to be plain mpeg4, not h.264 encoded for it to work by drag and drop and sync instead of converting again through itunes? Please someone guide me.
(I used video bitrate 900kps, audio 96kps, mpeg-4 encoded h.264) Sorry if this is posted in the wrong forum.

[kcrmson]

It might also have to do with the data rate, here are the specs of a compatible video I have on mine, this one's a .m4v TV show purchase from iTunes:

Format: AAC Stereo audio at 44.1 kHz, 128 bitrate
H.264 AVC0 Media codec at 640 x 480 pixels, millions of colors
Data rate: 1244.50 kbits/sec

In iTunes itself, it will also tell a profile, I've never seen anything aside 'Low Complexity' but when you choose the 'Convert selection for iPod' it's using whatever presets are appropriate for playback on the iPod/iPhone. Even if all settings look right but the data rate is too high, it won't sync.

I just looked at a non-purchased video (ripped from YouTube then converted for iPod/iPhone use) and the specs are very similar aside the data rate, which is lower because YouTube vids are encoded with low data rates to help streaming. If I recall, I think exceeding 2500 kbits/sec prevents it from being used on the devices.

[m600i]

I am way below the max bitrate. Here are the specs of the original converted file in cucusoft ultimate:

movie.mp4
Kind: mpeg-4 video file
Profile: Low Complexity
Size: 669.6MB
Channels: Stereo
Bit rate: 111kbps
Total Bit rate: 1111kbps
Video Dimensions: 480x320
Video Codec: H.264

Then iTunes made me convert it to the following:
movie.m4v
Kind: mpeg-4 video file
Profile: Low Complexity
Size: 952.2MB
Channels: Stereo
Bit rate: 120kbps
Total Bit rate: 1584kbps
Video Dimensions: 480x320
Video Codec: H.264

My original file is even less a bit rate then the itunes converted one, so what could be the problem? iTunes converted a .mp4 to .m4v why?

enen with videora, i still need to right click in itunes and say convert to iphone, anyone please help.