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After upgrading my iPhone 4 to iOS 5 I recognized, whenever I close a movie mid-play by clicking Done and selecting it again, it will just restart and not remember where it was before.

This was remembered in the previous iOS release when videos where still located in the Music app.

The videos were not purchased through iTunes but converted from avi with ffmpeg (just to be complete).

Is this a known issue?

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up vote 0 down vote accepted

No - this general behavior wasn't changed in iOS 5 as part of the video / music app split.

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Ok, maybe I brought it into an inconsistent state, when a sync broke. iTunes is also showing videos I already deleted. I will try a reset. – OliverS Oct 27 '11 at 14:17
One thing I like to try (but requires a Mac with Lion) is to re-encode the file using Finder services just to be sure the video container and the video stream let iTunes do all the fun features. – bmike Oct 27 '11 at 14:54

It is a regression in IOS 5.0 and 5.0.1 as video can not be resumed from the paused position. There is a workaround to temporarily fix the issue:

Firstly you should copy a video to your iTunes library. After that copy it from "Films" in your iTunes library to your device.

Voila, now you can watch your movie, pause it, do something else, and after returning back it will resume from the last position.

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From my experience, I still can pause at any time and close the video app. Tapping Done resets the paused position. – OliverS Nov 11 '11 at 7:37

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