FYI: Just wanted to document this issue here in case others run across it, since I just spent 5 hours figuring this out!

The Pure Digital PSV-351 Flip Camcorder is pretty popular (I just bought one ) but I had problems with the AVI files it produces and FFMPEG.

Here is the issue: the Flip camcorder creates an AVI file using microsoft mono 16000 Hz adpcm audio. When trying to use ffmpeg to convert this to any other format, the codecs see the pcm audio but seem to expect it to be stereo format. So the video is converted ok but the audio taken as stereo not mono and is converted to garbage.

So what I found finally that works is:
1)Strip out the audio (the "-acodec copy" param seems to be the only way to get the audio out of the flip avi):
ffmpeg -i flip.avi -vn -acodec copy flip_audio.wav

2)Convert the stripped out audio to a stereo format (with a wav file as the input, the codec *does* seem to recognize its mono and convert it correctly):
ffmpeg -i flip_audio.wav -acodec mp3 -ar 44100 -ab 192 -ac 2 flip_audio.mp3

3)Combine the orginal flip avi with the new stereo audio file and convert to the target video format (for compact format):
ffmpeg -i flip.avi -i flip_audio.mp3 -map 0:0 -map 1:0 combined_video.mp4
(or for ntsc-dvd compatible video):
ffmpeg -i flip.avi -i flip_audio.mp3 -map 0:0 -map 1:0 -aspect 4:3 -target ntsc-dvd my_dvd_video.mpg

Have a great day!