MacWorld says:
iTunes movie rentals are unlikely to appeal to everyone, particularly people who still prefer to own their media as well as others who have no qualms about taking what they can get via BitTorrent. But for those users who are more interested in an easy, straightforward way to download premium movies that can be [...]

Following studios are onboard - 20th Century Fox, The Walt Disney Studios, Warner Bros., Paramount, Universal Studios Home Entertainment, Sony Pictures Entertainment, Metro-Goldwyn-Mayer (MGM), Lionsgate and New Line Cinema.
Then why are titles so limited? Price war?

Jobs said:
Apple says it plans to add more than 1,000 films by next month; the company will likely continue scrambling to increase its catalog. Apple’s ability to add films quickly will be crucial to its success in this area, because when people decide they want to see something, they’ll search for it where they know [...]

Download this utility and install it as a Finder Plugin (copy to ~/Library/Workflows/Applications/Finder/ )
Select some movie files, right click on one of them, and select the workflow from the Automator menu. Quicktime Player will each movie, export it to an iPod-friendly video format, import it into your iTunes Library (and Videos playlist), and play it [...]

Quality is what keeps us obsessed with iTunes. Let’s start with current list of toppers:

Stardust
Kids & Family

Shooter
Action & Adventure
Step Up
Drama
Enchanted
Kids & Family
National Treasure
Action & Adventure