Yes, movies can also be watched on your iPod.There are movies available in iTunes store. After purchasing the movie just sync them onto an iPod. As iPod's now have 80GB capacity, so you have a theatre on your pocket. That's a cool feature.
Yeah thats a cool feature and I have tried it myself for couple of movies.If you can try sitting in front of a small screen for 2 hours than you can definetely try out this feature,I must say the Video quality is superb and you wont feel the pain looking at the screen continuously.Also 30 GB in my Video IPOD makes it easier to store and watch few movies