VLC Media Player 1.0
the author of this app says:
VLC is a free and open source multimedia player. It reads almost every video file, yet it's very powerful and simple to use. Notes: - You have to use iTunes to remove videos you've added to VLC. - If you get a black screen, you're probably using iOS version 4.2 beta 1 which is not supported yet. - Some movie formats are not recognized by the application for this first version but should be added in the next release. For now, just rename your files to ".avi" - To add subtitles to a movie, the name of the subtitle file has to match the name of the movie.
Compatible with iPad. Requires iOS 3.2 or later.