GSP does not convert videos during upload. Since you have very long videos, you will want to choose a format that supports progressive downloading. Any of the formats that play in Silverlight do this (wmv, mp4, asf, etc). I am not sure about some of the other plug-ins (Flash, DIVX).
Edit: I just noticed that the Flash video player *does* support progressive downloading, so it starts playing before the whole thing is downloaded. I also should point out that you will probably want to use FTP to transfer very large files to the server as HTTP can have problems.
It may be possible to use the streaming support that is available in IIS for true streaming capability, but I have not spent much time with that technology and don't know how well it works or whether it works with GSP.
Roger Martin
Creator and Lead Developer of Gallery Server Pro