VLC, the most awesome video player in the world that supports any video codec you throw at it, already available for the ipad now adds support for the iphone/ipod touch. So, your iphone might just get more codec friendly than ever. No more re-encodings and also, you will be able to delete videos right from the player.
But sad thing is,all files have to go through the itunes software ONLY, that sucks imho. But what doesnt go through the itunes? only jailbroken files.
Lets face it, it is Apple.