converting for Iphone (wrong aspect ratio)

[h0stile]

I downloaded the Iphone/Ipod version to try and encode a few movies from avi to mp4 for my Iphone. I selected the H.264 gpu/cuda format and it's processing around 250 frames per second (GTS250) BUT all the movies have bad AR. the picture is stretched vertically. why? I chose resolution 480x320 and tried two times with auto crop to fit and no cropping. no change. what am I doing wrong?

second, I tried attaching a subtitle but my language is not in the drop-down box. I usually select eastern european encoding (in vobsub for example), so it will render correctly all the characters but it seems there is no such setting in mediacoder. is there anything I can do? (language is romanian)