The much-beloved, multiplatform, open-source VLC Media Player has finally become available as a free app for the iPhone 3GS and 4, and recent models of the iPod Touch, after earlier only being available on the iPad.
The primary appeal of VLC is that it will play many more video formats than the few natively supported by iOS devices. When you sync your device using iTunes, you just drag and drop videos into the File Sharing window for VLC in the App tab on iTunes, and the videos will appear in a scrolling, vertical list the next time you open VLC on your device. Playback is landscape or portrait, with a familiar set of controls (pause, play, a volume bar, a progress bar, time remaining, and a Done button). You can also delete files directly from within VLC, without having to go back through iTunes.
Just like on the Mac, VLC is extremely helpful for watching videos in any format--but it can't help your device handle particularly large or high-resolution videos, like HD movies from a Flip camera (which will produce an error message that says, "Your iPhone is probably too slow to play this movie correctly"). You'll need to use another app, such as Handbrake, to lower the resolution.