The popular video player port was on the App Store for three months before being removed in January 2011 because Apple's FairPlay wrapper violated VideoLAN’s licensing agreement.
Fear not, there's a solution to replace the venerable open-source video player on iOS.
GPlayer ($2.99, App Store) supports playback of numerous file formats, including: XVID/DIVX AVI, WMV, RMVB, ASF, H264, MKV, TS, M2TS, and more. You can sync videos via USB or Wi-Fi and it supports TV-out and AirPlay.
The bonus is that it's a universal app, so it works on the iPhone/iPod touch and the iPad.
Update: GPlayer was free yesterday (May 22, 2012) now it's back up to its regular $2.99.