VLC Media Player has been updated to 1.1.0 and is now a universal app. The developers, Applidium made news recently with the launch of VLC for the iPad and now they have delivered on their promise to extend VLC functionality to all iOS devices including the iPhone. VLC media player is free, open source, and known for playing almost any video format imaginable.
Now you can play different video files without first converting them to the normal iPhone video format. Although it takes more steps than just adding videos with iTunes, ultimately it simplifies playing a variety of video formats on the iPhone. To start, just install the free VLC universal app on your iPhone from iTunes.