VPlayer Alpha is the only app in Android Market which allows you to play wide variety of video and audio formats on your Android phone including FLV, AVI, 3GP, MKV, MP4, RM, DivX/Xvid, WMV and MPEG. I have tested all of these formats on my Google Nexus One and have found no lag or any other issue with it so far.
You can also play 720p HD videos on your Android phone with VPlayer Alpha, however it also depends the CPU power of your Android phone. You can forward, rewind, pause and play all video formats in full screen mode. Just place any video or audio file in your SD card and navigate through VPlayer app to play it as shown in the screenshot below:
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You can download VPlayer Alpha from Android Market for FREE or use the QR code below to download it directly: