What is flv format ? I know it has something to with video. And how do I convert files to flv format
It is flash. More here: http://en.wikipedia.org/wiki/FLV
You can convert files to flash with Adobe (formerly Macromedia) Flash or the cheaper alternative: Swish. There may be others, but these are 2 that I know about.
Just for clarification, you're converting a mpg, avi, etc to FLV format to play inside Flash player. Flash 8's encoder is pretty awesome compared to 04, and I haven't seen Flash CS3. There's also Sorenson Squeeze, but that requires some serious $$$.