i have the same problem on my ipad1, but I can't find the movie on my ipad to delete it. When I plug into my computer and select Rental on the left under devices, I see the movie in the right larger column, but don't see a way to delete in any of the itunes menus or even control clicking the movie title in iTunes.
WHen I try to update to iOS5.1, i get the message that I need to transfer this rental first to my iTunes library. ANd then it says" are you sure you want to continue?"
Maybe I should say Continue since the rental expired long time ago any way.
I don't see the movie in my Video app, or doing a search doesn't find the movie either. So it's like it isn't really on my ipad in a way.
PS: doing a transfer doesn't transfer it by the way.