VLC is a free and open source media player, and a clever bit of technical wizardry in that it allows you to play almost any format video file on your iDevice without having to convert it first.
Version 1.1 of the player is also improved in that you can delete files directly from the app, without having to go via iTunes. And it supposedly features better decoding optimisation for smoother performance.
The bad news is that the app only works with newer Apple handsets, the 3GS and iPhone 4, and more recent versions of the iPod Touch. It currently won’t work with the second-generation iPod Touch, unfortunately.
The initial iPad version was apparently pretty buggy, although it seems those bugs have been ironed out to a large degree, according to buzz about the app around the net.