Ok... I guess I will try out a few players and post my findings.
The first one I tried was called simply "Cinema". The program is as basic as it gets.. there are literally no options, it just plays video. The controls are cool.. you tap the screen to pause and resume. You tap and drag left or right to FF and Rewind. If you hit the "home" button to leave the app... it will pick up the movie in the same place where you left it. You can also browse your whole SD card in any folder with a built-in browser.
As a test file I took a video Podcast (1up Show) and used the I-pod touch pre-sets in VEMoDe to resize the video. I set the resolution to something like 480x350 and it spit out about a 300mb mp4 video. It looks gorgeous on the screen and runs nice and smooth! No complaints so far. I know there are probably better programs to resize and re-encode... but this is one I had on my PC because I used to use it for videos on my Treo.
I'll try out a few other players, see how they work and post what I find. Cinema pretty much does what I need so far though... I'll have to try to encode an entire DVD movie and see how that works.