You are referring to this part:
Proprietary Rights in Content on MySpace.com
By displaying or publishing ("posting") any Content, messages, text, files, images, photos, video, sounds, profiles, works of authorship, or any other materials (collectively, "Content") on or through the Services, you hereby grant to MySpace.com, a non-exclusive, fully-paid and royalty-free, worldwide license (with the right to sublicense through unlimited levels of sublicensees) to use, copy, modify, adapt, translate, publicly perform, publicly display, store, reproduce, transmit, and distribute such Content on and through the Services.
I think this is partly a case of making sure that if another member steals your movie, or changes it and posts it as something else, you cannot hold myspace responsible. They are just covering their ass across the board.
But regardless, the next line states:
This license will terminate at the time you remove such Content from the Services...
So, in truth, you are not granting myspace the rights to your work forever. But, while you are using their free hosting service, they also want to be able collect advertising revenue from the traffic your film might bring. Not to mention they want to use the ability to promote your film as a way to bring more traffic to myspace in general (and it's advertisers).
So basically, you can post your films on myspace, and if at any time you don't like arrangement anymore, you can remove it and they no longer have any rights to it. Doesn't seem like a bad deal considering the customer access potential that exist on the site.