The idea behind sms4linux is to provide an all-in-one open source solution to allow streaming and syncing abilities of media content over a network and the Internet. Everything on the server should be stored in an open source format (i.e. FLAC, OGG, MKV, MKA). Because people already have built up music libraries in MP3, MP4, AVI, M4V, etc, a high quality, zero configuration converter should be included on the server side (like how you submit a video to youtube and wait for it to be converted to flv and mp4). To keep support for syncing of devices like iPods, it might be a good idea to give the option to store everything in MP4 / M4V formats. Importing of DivX and Xvid videos is important because a lot shared videos online is stored in this format. FLV (flash) is also very important for allowing people to import flash based video from sites like Youtube, Hulu, Daily Motion, etc.
These details are provided for information only. No information here is legal advice and should not be used as such.