i dealt with this problem as well.
couldnt make it play back hd content at its full speed, but you shouldnt be doing that anyways.
the screen is 480x800, which is 16:10 aspect ratio SD resolution. the ppi is 230 which is VERY high
you can watch widescreen Standard Definition content and since the pixel density is so high, it will look extremely good.
I put SD content on my sdcard becuase it plays smoother than hd and looks as good on that particular screen. 720p content still has to be downscaled for the wide 480p screen so you gain nothing. might as well use content that has a 1:1 pixel match. you also save a BUNCH of sd card space this way
if your interested in the HDMI output, i should warn you that it outputs in 480p, and when you play hd content, it downscales that hd content to 480p before it gets to the tv, so the final result on the tv screen is about dvd quality. no HD. sucks but thats how it is.