iLounge reveals a bit of discerning information that took a mysterious amount of time to surface. It turns out that the iPhone 4 shares the same limitations as the iPad and the Apple TV in regards to being unable to transfer rented movies back to your iTunes library.
The ability to move rentals had never been a problem before when renting on previous iPhone models. An excerpt from the iPhone iOS 4 User Guide briefly mentions the limitation on page 99, and it reads as such:
Lately, I have been working on getting my iPhone ready for our long trip beginning in about a week. I started a few weeks ago by moving my contacts and calendars to the cloud with Google Sync. The next step was to move some of my music from my computer to my netbook.
I could just sync my iPhone before leaving and load it up with music but if something wrong happened (ie if I had to restore), I would lose all my music, which is why I think it is wise to move the music I want to my netbook.
There are many iPhone to PC softwares out there. My favorite is Lenogo (for Mac and PC). I use it on my everyday computer to copy music from iPhone to computer. Tansee is another solution but I like the UI of Lenogo better.
All these softwares cost money though and I didn't want to have to buy another license for my netbook so I had to go the good old way about transferring my music to my computer.