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I would say that the video with MS Media Player does suck.
However, with my new MPx200 (transflective) and PocketMVP, videos look amazing. I encode at 224x(depends on source video), 15fps (one or two are at 24 and play fine), 175-200 kbps Divx 5.05, 32kbps 22,050KHz MP3 Stereo audio. I currently have on my SD card some epsidoes of Will and Grace (from the DVD set), 10-12 trailers, and some 3D animated shorts. They all play flawlessly.
PocketTV, too, is great...just doesn't offer the compression that Divx video does. Performance using it is awesome though.
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Current Toy Bag ~ T-Mobile Dash ~ Apple MacBook (2GHz, 2GB RAM, 160GB HDD, SuperDrive) ~ 30GB iPod ~ Canon MP500 ~
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