If you check Cydia for new releases today (like me!) you may found a new (may be  an updated version) application called vWallpaper!

Forget black Springboard, add a Video on it! Forget Simple Ringtones, hello to Video Ringtones

After installing you will find a new icon on your SpringBoard named vWallpaper! Open it! Now you have 2 Choices; you can select Video Wallpaper and/or Video Ringtones!

In video wallpaper section you can download videos and enable video on the iPhone SpringBoard (Picture wallpaper also available!).

In Video Ringtone section you can download video ringtons & enable iPhone to show video when ringing! An interesting function in this section is Manage Contacts! so you can assign video ringtones to your contacts!

and of course some disadvantages:

• Wallpapers reduces battery life (Aslo LCD life)
• Buggy user interface (Navigate to the bottom of page crash the application!)
• Can’t use the iPhone photo album for picture wallpaper
• Can’t use the iPhone Camera for creating new videos

As I see this software supports .mp4 (Mpeg layer 4) & .m4v (Mpeg-4 part 14) file format for video ringtones and .mov (QuickTime file format)  for video wallpaper! Now the question is “How can I use my own video with vWallpaper?”

First of all you must convert your movie to .m4v (for Ringtone) / .mov (for Wallpaper) then copy your files to iPhone using SSH connection or USB-Cable (Search google about iphonebrowser for cable connection).

vWallpaper file location:

Video Wallpaper

“<root>\Applications\vWallpaper.app\private\var\mobile\Media\Skrew\Videos”

Video Ringtones

“<root>\Applications\vWallpaper.app\private\var\mobile\Media\Skrew\vRingtones”

Picture Wallpaper

“<root>\Applications\vWallpaper.app\private\var\mobile\Media\Skrew\VWBackground”