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VLC media player is by far the best media player for video files that exists. It's not only open-source but it is multi-platform. It's now been spliced and hacked to run on the iPhone, iPad, and iPod touch.
The videos feature on your iOS device requires files to be in an iOS-compatible format, such as .mp4 or .m4v. VLC allows you to add in pretty much any file there is and play it, cutting out the need for complicated desktop media converters, or buying legitimate copies through an overpriced iTunes.
Compatible with: iOS 5, 5.0.1, 5.1.