Multiple video sources combined into one

I am looking for an efficient way to do the following:

Using several source videos (of approximately the same length), I need to generate an output video that is composed of all of the original sources each running in its own area (like a bunch of PIPs in several different sizes). So, the end result is that all the original are running side-by-side, each in its own area/box.

The source and output need to be flv and the platform I am using is Windows (dev on Windows 7 64bit, deployment to Windows server 2008).

I have looked at avisynth but unfortunately it can't handle flv and non of the plugins and flv splitters I have tried worked.

My current process uses ffmpeg in the following manner:

Use ffmpeg to generate 25 png's per second per video, resizing the original as needed.
Use the System.Drawing namespace to combine each set of frames into a new image, starting with a static background, then loading each frame into an Image and drawing to the background Graphics object - this gives me the combined frames.
Use ffmpeg to combine the generated images to a video.

All this is very IO intensive (which is my processing bottleneck at the moment) and I feel there must be a more efficient way to reach my goal. I do not have much experience with video processing, and don't know what options are out there.

Can anyone suggest a more efficient way of processing these?

Do everything inside ffmpeg. You can do a lot of things with video filters. For example to join two videos side by side:

ffmpeg -i input0.avi -vf "movie=input1.avi [in1]; [in]pad=640*2:352[in0]; [in0][in1] overlay=640:0 [out]" out.avi

@Oded: That's basically what this command does. You can remove the pad filter and change the parameters of overlay filter to move the second video wherever you like.

ffmpeg -i big.avi -vf "movie=small.avi [small]; [in][small] overlay=10:10 [out]" out.avi

The link I provided describes the filter syntax. You can chain multiple filters together:

ffmpeg -i big.avi -vf "movie=small0.avi [small0]; [in][small0] overlay=10:10 [tmp];\
                       movie=small1.avi [small1]; [tmp][small1] overlay=30:10 [out]" out.avi